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Fusion-io In A Booming Market

Posted on Wednesday, Feb 29th 2012

According to researcher IDC, the enterprise flash market will grow to $4.5 billion by the year 2015 from an estimated $1.5 billion in 2011. But IDC’s estimates are among the more conservative. In a survey of CIOs conducted by Morgan Stanley, the financial services firm found that the enterprise flash market will triple in 2012 and soon reach $20 billion. Another report claims that the performance disk market is projected to grow 10%-20% annually over the next ten years to reach $20 billion by 2021. Within storage, the race then continues to develop higher efficiency products as are being developed by SSD leader Fusion-io.

Fusion-io’s Financials
Fusion-io’s (NYSE:FIO) Q2 revenues grew 169% over the year to $84.1 million with EPS of $0.05. The market was looking for revenues of $76 million with earnings of $0.03 per share. Revenue growth was helped by sales of their IO Drive 2, which has sold more than 10,000 drives since release last quarter. They also continue to build on their customer base within the country and internationally. Fusion recently announced the addition of Salesforce.com and Japanese social gaming company Drecom to their customer list. But the market was worried about the gross margins of the company which fell from 59% to 51%. Fusion attributed the declining margins to investment in product development.

The company projected current quarter revenues to be flat with earnings to drop from the present 7% to 5% with revenues of $85 million. The market was looking for revenues of $79.9 million in the quarter. Fusion expects fiscal 2012 revenues to grow 65%-70% over the year, and to end the year with margins of 8%.

Fusion-io’s Expanding Products
As part of their expanding product line, they announced the development of a new solid-state drive boasting a capacity of 10 terabytes. The new ioMemory product, ioDrive Octal, delivers upto 20 terabytes of  flash-based acceleration in a 1U server and integrates eight 1.28 TB MLC ioMemory modules in a single double-wide PCIe device to deliver increased capacity. The market expects that drive to be boosted with technology to help deliver a transfer rate much faster than the competitors’ products, which manage 160 transfers per second. The product is expected to be available in the market this quarter.

Earlier this month, they announced a new breakthrough in low latency data performance achieved by their innovative Auto Commit Memory Software. Fusion announced that they achieved one billion input and output operations per second in a demonstration conducted for their new latency-reducing Auto Commit Memory extension, which will be a part of the Fusion ioMemory subsystem. The product boasts of software that optimizes NAND flash as a low-latency, high-capacity, nonvolatile memory solution for enterprise servers that will help deal with the big data problems facing organizations today.

Fusion’s stock is trading at $26.95 with a market capitalization of $2.43 billion. It reached a high of $41.74 in November 2011.

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