Hewlett-Packard Ending Deal With Pre-IPO Violin Memory

Hewlett-Packard Co. (HPQ) is planning to end a deal to resell high-end storage computers from Violin Memory Inc., in a potential blow to the company as it prepares for an initial public offering.

Hewlett-Packard, which supplies server computers, data storage devices and networking equipment to businesses, has been reselling Violin’s solid-state storage machines, which can quickly crunch large amounts of data, working with Hewlett- Packard’s servers. Hewlett-Packard is discontinuing the partnership in favor of its own 3PAR storage devices.

“HP 3PAR is our strategic platform for solid-state storage,” Mary Camarata, a spokeswoman for Hewlett-Packard, said in a e-mail.

The relationship between the two companies “remains unchanged,” Suzanne Chan, a spokeswoman for Violin, wrote in an e-mailed statement. “The same products continue to be available to customers via HP as when we entered into the relationship. Joint selling also continues.”

Neither spokeswoman would comment on the scope of the partnership or how much revenue it generates.

The market for enterprise solid-state storage was $2 billion last year and accounts for about 40 percent of solid- state sales, according to data by market research firm IDC compiled by Bloomberg Industries.

IPO Plans

Violin Memory stands to lose a key partner. Last month, it filed to go public in a deal that could fetch almost a $2 billion valuation, two people familiar with the matter said this week. Based in Mountain View, California, Violin Memory had sales of $100 million last year, according to Chief Executive Officer Don Basile.

Customers pair Violin’s solid-state storage devices --which use silicon chips instead of magnetic disk drives to store information in data centers for faster access -- with Hewlett- Packard’s servers to run Oracle Corp. (ORCL)’s database software. The combination of products lets Hewlett-Packard and Violin compete with Oracle’s high-end Exadata computer, he said.

Palo Alto, California-based Hewlett-Packard, in the middle of a multiyear turnaround effort by CEO Meg Whitman, is favoring its own intellectual property. It bought 3PAR for $2.1 billion in 2010 as it seeks to maximize revenue from data center sales.

Whitman is cutting 29,000 jobs by the end of fiscal 2014 to save as much as $3.5 billion a year. On Oct. 3, the company sliced its earnings forecast for the coming fiscal year at a meeting with analysts, and Whitman outlined steps including more focus on corporate customers and narrower product lines.

Hewlett-Packard’s storage business accounts for about $4 billion a year in sales, Senior Vice President David Scott said in a recent interview. Demand is growing as corporate data expands by at least 35 percent a year and storing data accounts for about 10 percent to 15 percent of businesses’ information technology spending, he said.

Hewlett-Packard shares fell 2.2 percent to $14.48 at the close in New York. The stock is down 44 percent this year.

To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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