What Happens to Verari’s Technology?
December 14th, 2009 By: Rich Miller
There has been speculation about the financial health of high performance computing specialist Verari Systems ever since the company failed to show at the SC09 conference, where it had purchased a booth. Most employees have been let go, and reports Friday on Twitter and Inside HPC indicated Verari had shut down.
On Monday the company issued a statement, saying it is reorganizing. “Verari has initiated a process that will protect our customers investment and benefit our creditors as we restructure the business,” the company said on its web site. “The intention is to safeguard customers investment and provide an ongoing support capability. There are several options that are being considered to provide solutions to our customers. We expect to have the new plan in place soon.”
Earlier Monday, Verari CEO David Wright told InsideHPC that the company is in a “controlled reorganization” and won’t file for Chapter 11 or Chapter 7 bankruptcy. Wright says Verari is still open for business and working on a support plan for existing customers.
One rumor, seen in the comments at several sites, is that an investor may try to acquire the assets of Verari’s data center container business to form the nucleus of a new company.
For now, the current state of Verari leaves serious questions about the future of the first two commercial data center container offerings. Verari announced its container program shortly after Sun Microsystems unveiled its Blackbox container, since renamed the Sun MD. Back in April Sun agreed to be acquired by Oracle for $7 billion, but the deal has been delayed by antitrust concerns from European regulators.
Microsoft also uses a Verari container to power its Virtual Earth service. Despite its early adoption of Verari’s container, Microsoft later chose to use containers from Rackable and Dell in its huge container farm data center in Chicago, which may ultimately hold up to 150 containers packed with high-density servers.
Other large companies on Verari’s customer list include Virgin America, Morgan Stanley, Wachovia, Akamai, EMC, Lockheed Martin, Northrop Grumman, and Sony Imageworks.
Here’s a video from Data Center World 2008 in which Verari’s Michael Slagel gives a brief demo of Veraris XM Blade Rack and describes the Forest container solution.
It’s going into an ABC dissolution (Assignment for the Benefit of Creditor – bankruptcy with self appoint trustee).
Word is, there are 5 companies looking to bid for the assets – final bids due by Jan 15.
As I posted on my blog over the weekend, someone looking for the most solid container technology around will get them for a steal. It will be interesting to see who ultimately wins the asset bid – my hunch is that the acquirer will shelve the server/storage technology and focus on the container. If Cisco really wants to take a shot at HP, containers are one of the last frontiers, they are vendor neutral, and will take equipment from every comptitor to HP servers. They will even take HP gear.
Anyway, sorry to see this happen. smart bunch of people.
Sadly, I would not be surprised to see the technology either unacquired or acquired and then left to rot somewhere inside a big company that forgot they had it. SiCortex had some good technology too, as did Woven and Quadrics which went under at the same time, but keeping advanced technology alive requires investment no matter whose logo is on the letterhead. If it’s hard to find parties willing to invest prior to asset sale, it’s also hard to find parties willing after.
Owen ThistlePosted December 14th, 2009
I hope we see Verari restructure and focus on the POD Container space where their aggregation and density performance shine.
I did hear from an associate in Boston who has done some work with EMC’s CIG BU that Verari was at risk of loosing this, what I would assume to be large and rapidly growing business because of management interface issues and VLAN support problems exposed by a network virtualization technology that EMC is using to automate their cloud data centers and service delivery for cloud computing. The dynamic changes created by the system ( I think it is LineSider) could not be handled by Verari and apparently Cisco has stepped in and works with LineSider technology. For this reason I doubt Cisco would bid for verari….too much overlap with Nexus and UCS also the loss of that business must have been a blow to Verari.
Who knows maybe Brocade will add to the Foundry portfolio or someone like Emulex will make a diversification move with the leverage of base in storage.
I had a bunch of conversations with people yesterday and there is a plan to re launch, they just need money to clean up the broken glass, and keep producing/manufacturing on orders already placed. Bottom line – they will emerge a stronger more focused company.
Another ExPosted December 15th, 2009
Uh, Mark. That’s the same line that Verari management had been doling out to the employees for months. That part about “just need money”, thats key. And, no entity to date has wanted to throw their cash down the porcelain convenience.
Owen – I’m so sick of this. How do you propose that one customer they were at “risk of loosing (SIC)” could crash the company. Use some logic. Please. It’s obviously been poorly managed from a financial standpoint for several years. I suggest three years, since DW bled the cash out of the company to employ all his buds from Amdahl.
Owen ThistlePosted December 15th, 2009
Clearly you are close to the situation and I have seen first hand what a top heavy poorly executing management team can do to a great company in its formidable stages of growth. I completely agree with your. Assement and am sure you are dead on.
All I was mentioning was a commercial situation with a potentially huge customer that was dropping verari for the reasons I outlined and the Fact that the situation probably did not help…….one way to fix burn is cashflow from big sales. If your CEO had that business in the pipeline of even worse forecasted and it drops you can be sure it did not factor well with the likes of Carlyle in terms of continuing too fund verari’s gap. That’s all, it takes a confluence of circumstances to bring a good company like verari to its knees….poor management for sure and some sort of top line concern too…..if the sales growth is/was there then your investors would have stepped up or bridged the co to cashflow from sales. But like said it all points in one direction and you clearly articulated that.
I am sorry for all the good folks there and hope new opportunities present themselves quickly for those that deserve them.
Curious BystanderPosted December 16th, 2009
Out of curiousity, I looked up Verari employees on LinkedIn, and was amazed at how top-heavy they seemed!
Perhaps the “rank-and-file” people just aren’t on LinkedIn (doubtful), but there was VP after VP…
Sad to see Verari go.
Another ExPosted December 18th, 2009
Verari, has (had) one of its biggest backlogs in the company’s history. Bridge funding only went so far along with payroll cuts, etc. All other long-term investment avenues could not be arranged before Verari ran out of runway.
Another ExPosted December 18th, 2009
Curious – 8 of the 16 are DBW cronies from Amdahl/EMC
Actually, let’s be accurate here.
Two of the deep insiders are from Cray/TERA and were promoted heavily by DW, while 9 are DW friends from Amdahl or EMC or Legato (a tenth friend quit a year earlier or “retired”)…
Its nice that the pictures are still up. Future potential employers take
Its interesting how much press this company failure has gotten compared to all the other HPC firms that died in 2009 and other recent years.
As an interested bystander, does anyone have a rough idea of price paid for the assets?