Facebook Storage Supplier Fusion-io Will IPO

By Jackie Cohen Comment

Fusion-io filed for an initial public offering today. This storage company powers much of Facebook’s data center in Prineville, Oregon, and will soon do the same for the facility under construction in Rutherford County, North Carolina.

The company uses flash memory to speed up data storage, and this technology accounts for about 80 percent of the hardware running inside Facebook’s data center, according to All Things Digital.

Interestingly, Facebook investor Goldman Sachs is leading the IPO, along with Morgan Stanley, JP Morgan and Credit Suisse. The filing doesn’t yet say how much Fusion-io plans to raise in the deal.

Apparently, the storage vendor had said in December that it wasn’t in a hurry to go public. However, that statement to All Things Digital came upon the closing of a $45 million round of funding led by Meritech Capital Partners, with Accel Partners, Andreessen Horowitz, New Enterprise Associates, and Triangle Peak Partners. That was the third venture investment in the company.

But now Fusion-io appears to need a lot more money, due to a $31.5 net loss recorded for 2010 on $36 million in revenue. Even though the company had a 59 percent gross margin during the fourth quarter of 2010, operating expenses amounted to $52 million for the year. On the other hand, the balance sheet lists $3.5 million in cash and equivalents plus $39 million in working capital, as reported by All Things Digital.

We suspect that the temporary deficit might have to do with advancing the capital required to fill up Facebook’s data center under construction in Rutherford County, North Carolina. However, Fusion-io also has some other big customers like Hewlett-Packard and IBM that could possibly have put in large orders.

What do you think about this forthcoming initial public offering?