The Bear Case for Fusion-IO, Inc. (FIO): Part Two

Variant View

Aggressive internationalization of Fusion-IO, Inc. (NYSE:FIO)’s business could be a positive catalyst, as the company needs to diversify its revenue sources as much as possible. David Flynn (former CEO) mentioned in the latest earnings call that international business already represented a full 50% of total revenue and that, specifically, orders from Asia Pacific grew 120% and from EMEA grew 90% year-over-year. I believe that Asia is an excellent market for Fusion-io’s products due to the existence of abundant social game companies, who need to handle big data on an every day basis.

Executive Summary

Fusion-IO, Inc. (NYSE:FIO) needs to deal with very high expectations for the next quarter’s earnings. The current revenue growth rate shows that Fusion-io will need to close some very big sales if they want to beat the street, which is unlikely, due to increasing competition and low barriers to entry. Finally, we introduced a variant view: an aggressive internationalization of Fusion-io’s business (with a focuss in Asia and, specifically, social gaming companies) could be a positive catalyst.

Final Remarks

Rating: Sell / from N.A.
Price target: $10
Investment Strategy: Event driven. Sell short before the next earnings call.
Uncertainty: High

The article The Bear Case for Fusion-io: Part 2 originally appeared on Fool.com and is written by Adrian Campos.

Adrian Campos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Adrian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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