Future SNAX member is a traded company now....FALC
Melville, N.Y.
7:43 PM EST Thurs., Aug. 23, 2001
FalconStor CEO ReiJane Huai said the storage over IP vendor is braced to withstand the IT spending downturn and to expand now that it has completed a reverse merger with Network Peripherals.
The reverse merger puts $65 million in cash in FalconStor's coffers. "The slowdown is definitely impacting everybody's business," said Huai in an interview with CRN. "That is another reason why raising the capital is so crucial to our present and future success."
FalconStor, the maker of the IPStor software line, which centralizes, virtualizes and provisions storage over IP, immediately laid off the 130 employees at Network Peripherals, an Ethernet switch vendor. In addition, none of Network Peripherals top management is joining FalconStor.
FalconStor has 100 employees and is planning on adding another 10 to 20 employees primarily in sales and support by the end of the year, said Huai.
Huai said FalconStor plans to use the cash to acquire companies or license technology that accelerate what he called FalconStor's leadership position in the storage over IP software market. "We can move very, very fast if we find the right target and the right set of matches," he said.
On the other hand, Huai stressed that FalconStor is keeping a very "tight control on expenses" and will be very cautious and prudent in spending the cash.
Network Peripherals shares, which were traded under NPIX on the Nasdaq, are now traded under the FALC symbol. Network Peripherals shareholders received one share of FalconStor stock for every share of Network Peripherals.
In its first day of trading, FalconStor shares jumped from $9.60 to $10.20. FalconStor ended the day with a market capitalization of about $455 million. Huai owns approximately 20 percent of the outstanding shares, or about $90 million in FalconStor stock.
When FalconStor announced plans for the reverse merger with Network Peripherals, the Network Peripherals shares jumped 70 percent in two weeks from $7.90 on May 7 to $13.50 on May 21.
FalconStor will announce its first official quarter as a public company in October.
Huai said the additional capital is going to make FalconStor more aggressive in expanding research and development capacity and offering more services to FalconStor solution providers. Partners will see a "lot more seminars and one-on-one briefings with CIOs" driven by FalconStor, promised Huai.
The reverse merger, he said, also gives the company the "financial stability and credibility" associated with a publicly traded company.
The deal comes with FalconStor set to release on Sept. 5 the second-generation version of IPStor with support for the Sun Solaris operating system on the server side, additional Fibre Channel iSCSI support and a patented FalconStor key-based authentication security offering. The new patented technology addresses potential security risks associated with Fibre Channel connections to network storage. |
