Violin Memory, in Big Trouble, Provides Business Update

Violin Memory, Inc. provided a business update.

Recent Corporate Developments

Remains on track to launch additional, major product offerings in early 2014 that will strengthen the company’s software stack and position the company to maintain its leadership in the enterprise memory market.
Continues to have a robust product roadmap in place that positions the company to take advantage of the ongoing transition to a memory-based data centre and build an even stronger future for its stakeholders.
On December 16, 2013, appointed Howard A. Bain III, COB of directors, as its interim CEO. Under Howard’s leadership the company remains focused on maintaining the operational flexibility to address the current and emerging needs of its industry, and is pursuing additional tactical initiatives to improve the overall cost efficiency of the business. Violin Memory has retained a leading technology industry focused executive search firm to assist the Board in its search to identify a permanent CEO.

Financial Condition and Outlook

As of October 31, 2013, had cash and investments totalling approximately $134 million and lines of credit aggregating $58 million.
Also announced that it expects to achieve profitability in 2015.
Reiterates its long-term financial model expectations that include: gross margins between 58% and 62 percent; sales and marketing expense that is expected to be between 24% and 26% of revenue; engineering expense that is expected to be between 15% and 16% of revenue; general and administrative expense that is expected to be between 4% and 5% of revenue; and operating margin that is expected to be between 14% and 16% of revenue.

Commentary on Litigation

Noted that several plaintiffs’ law firms have recently announced or filed litigation against the company.
Intends to vigorously defend itself against these claims.
These matters will be handled in the appropriate venue and with the assistance of Orrick, Herrington & Sutcliffe LLP, a global law firm that has been engaged by the company.

“Violin Memory remains focused on its fundamental strategy to drive growth and serve its customers,” said Bain. “I see many opportunities ahead and look forward to engaging with the company’s customers, team members and shareholders in the coming weeks. Since being named interim CEO, I have been deeply impressed by our team’s commitment to our customers and products and believe we are well positioned to capitalize on the transition to a memory-based data centre. While much work remains ahead, I am confident that we have the right strategy, assets and financial resources to achieve success.”