This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Fusion-io Stock Gets Crushed

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Tom Taulli, InvestorPlace Writer

NEW YORK ( InvestorPlace) -- In early June, data storage company Fusion-io (NYSE: FIO ) pulled off a highly successful IPO . The company priced its deal at $19, which was above its $16-$18 range. On its first day of trading, the shares increased 18.4%.

  • Related: Megaupload bust sends jitters through file-hosting community

But since then, things have been bumpy, the latest hit coming Wednesday on the news of its latest earnings report. FIO shares plunged by 16% on the day to $25.50.

  • Related: Zynga gets zinged for playing copycat

Fusion-io develops whiz-bang storage technology for data centers, and it counts Facebook among its customers. And its chief scientist? None other than Steve Wozniak, the co-founder of Apple (NASDAQ: AAPL ).

There were some positives in the quarterly numbers, with revenue spiking by a sizzling 169%, to $84.1 million. But gross margins sank from 59% to 51%. With such a ramp in revenue, shouldn't margins actually increase?

  • Related: Apple's purchase of Anobit is a step forward for Post-PC future

Not always. Fusion likely is getting aggressive on investments, such as on marketing and R&D, to deal with its heavy competition. Keep in mind that EMC Corp. (NYSE: EMC ) is preparing to launch a rival offering. And then there are other comeptitors like Hitachi Data Systems, Micron (NASDAQ: MU ) and LSI (NYSE: LSI ), which have tremendous scale and also could be a big problem for Fusion-io.

Tom Taulli runs the InvestorPlace blog "IPOPlaybook" , a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of "All About Short Selling" and "All About Commodities." Follow him on Twitter at @ttaulli .

Related Articles:

  • Get the latest IPO date and IPO offering news for the hottest picks on Wall Street

  • Facebook IPO Filing on Friday?

  • Apple's eyes fixed on the cloud

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,055.87 -116.81 -0.68%
S&P 500 1,982.77 -11.52 -0.58%
NASDAQ 4,508.6880 -19.0010 -0.42%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs