Shares of Fusion-IO (FIO) are down 82 cents, or almost 3%, at $27.48 after Craig-Hallum’s Richard Shannon this morning repeated to staff some remarks he’d made Friday about mid-day that cast cold water on takeout speculation about the company.
Shannon, who maintains a Sell rating on Fusion shares, had written Friday after rumors emerged that Intel (INTC) might try to buy Fusion-IO, that such an idea ran counter to factors in the market for flash memory and emerging server technology.
Fusion-IO makes a plug-in “accelerator” for server computers that speeds up their ability to sift and serve up massive amounts of data. The company has said that it is in a sense selling a “graphics accelerator”-type circuit board, but for Big Data. It aims to make storage-area networks (SAN) a thing of the past.
Not only does Intel not buy such technologies, wrote Shannon on Friday, but it is contributing to new technology standards that may threaten to diminish the value of what Fusion-IO has built:
In Intel’s history, they have not been an acquirer of technology that enables the ecosystems they play in. Clearly flash memory can be a strong enabler of server unit sales, particularly into web scale companies, so we can see how people would try to start a rumor that Intel would be interested in it. However, this is not Intel’s historical behavior. They are more likely to supply capital to companies that provide this type of technology to make sure it is commoditized […] INTC is part of the NVMe working group, which is well known, but what is NOT well known is that Intel is much of the technical horsepower behind creating the software drivers and the rest of the ecosystem. We have personally communicated with the two people at Intel that wrote the NVMe drivers for both Linux and Windows, so they clearly understand what NVMe will do to commoditize the PCIe-attached flash card market. They are more likely trying to drive down the cost of flash cards as much as possible so that it will drive more server unit demand. Why they would want to buy a business whose margins they are trying very hard to drive downward doesn’t make any sense at all.
Then, too, with a market cap of $2.5 billion, FIO would be a “big bite” for Intel, perhaps too big, he thinks.
Intel shares today are down 15 cents, or half a point, at $27.22.
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