The stock market correction that began in January claimed another victim this week: the long-awaited debut of LSI Logic
spinoff Engenio Information Technologies.
LSI Logic Storage Systems was renamed Engenio in May in preparation for the IPO, which was expected to be completed mid-year. Engenio would have traded on the NYSE under the symbol “NGE.”
But Engenio and LSI announced late Thursday that the IPO will be postponed.
“Engenio Information Technologies, Inc. and LSI Logic Corporation today announced the postponement of Engenio’s Initial Public Offering (IPO) of its common stock due to present market conditions,” the companies said in a statement. “Engenio intends to evaluate market conditions for a more appropriate time.”
The storage sector has suffered along with the Nasdaq, which has lost 12.5% since peaking in January. The sector has been hit hard by pricing pressures and earnings that have failed to live up to Wall Street’s expectations.
In June, Xyratex
became the first storage company to go public since Seagate
returned to the public markets in December 2002, but Xyratex priced below expectations at $14 a share, and is currently trading around $9 a share, about 35% below its offering price.
Engenio had hoped to raise $102 million in the offering, according to a recent SEC filing, pricing 12.5 million shares between $8-$10 a share. The company’s revenues grew 13% year-over-year to $113.3 million in the second quarter. However, that was a 2% sequential decline from the first quarter, which the company said was due to the timing of two large orders from the Teradata division of NCR. Net income declined from $5.2 million, or 10 cents a share, in the second quarter of 2003, to $4.6 million, or 9 cents a share, in the second quarter of 2004, as the company absorbed $1 million in expenses for its spinoff and IPO. IBM
accounted for 54% of Engenio’s revenues in the second quarter of 2004, up from 50% in the second quarter of 2003.