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The 4 Worst IPOs of 2013

Even with the a strong market, there have been plenty of stinkers


Worst IPOs #2: Violin Memory (VMEM)

Violin Memory VMEM stockReturn:  -62.7%

One general rule for IPOs is to make sure the first earnings report is a good one. Violin Memory (VMEM), failed miserably on that count, and that’s how it landed on our list of worst IPOs.

The company, which develops Flash memory systems, reported a loss of 85 cents on $28.3 million in revenues for the third quarter. While the company hit its revenue expectations, the net loss was well off the 44-cents-per-share consensus estimate.

But the outlook was even worse. For Q4, VMEM put out a forecast for revenues of $30 million to $32 million, which fell far short of analysts’ $44 million estimate. On the news, VMEM stock plunged 46% to $3.25. Keep in mind that the company went public in late September at $9 per share.

VMEM faces some tough issues ahead. One is the heavy customer concentration: Five companies account for 37% of VMEM’s total revenues. The competition is also intense, with rivals like Dell, EMC (EMC), IBM (IBM), Oracle (ORCL), NetApp (NTAP) and Hewlett-Packard (HPQ) all competing for VMEM’s revenues. Not to mention a spate of venture-backed startups gunning for the market opportunity.

Article printed from InvestorPlace Media,

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