Monday, January 7, 2008

Filing shows GlassHouse 'acquisitive' IPO path

By Christopher Calnan

Regulatory filings reveal details previously guarded by a Framingham data and storage services provider that spent $3 million in 2007 to acquire four companies leading up to its Dec. 18 registration for an initial public offering aimed at raising $100 million.

GlassHouse Technologies Inc. acquired technologies particularly to bolster its strength in a growing virtualization market, pegged by some analysts to be on track to hit the $5.2 billion mark in three years.

The year's acquisitions also expand GlassHouse's business beyond storage and further its reach to customers outside the United States, said Simon Robinson, research director of storage for The 451 Group, a New York research firm.

Approximately $25 million of the $30 million GlassHouse used to acquire companies and technology in 2007 came from debt financers that include Lighthouse Capital Partners Inc. of Cambridge and BayStar Capital III Investment Fund LP of San Francisco, according to U.S. Securities and Exchange Commission filings. Lighthouse Capital loaned the company $19 million; Baystar, $6 million. Investors have put $50 million into GlassHouse since it was founded in 2001.

GlassHouse uses consulting and management services to help companies integrate virtualization technology. Virtualization is a red-hot market that includes creating a virtual version of something, such as a server, storage device or network resources. In July 2007, GlassHouse acquired Chicago-based server virtualization consultancy RapidApp in a stock-and-cash deal worth $10.5 million, according to SEC filings. The acquisition extended GlassHouse's offerings into virtual storage, virtual desktop infrastructure and application delivery and deployment services.

GlassHouse executives declined this week to speak about the company or its plans, citing the oft-quoted "quiet period" leading up to an IPO. In October, however, GlassHouse CEO Mark Shirman revealed to Mass High Tech plans to grow GlassHouse's business to $1 billion and retain its headquarters in Framingham.

The company's total work force more than doubled in 2007 -- to 425 as of September from 200 in September 2006.

It has also grown revenue, to $40.6 million for the nine months ended Sept. 30, 2007 from $28.5 million for the same period in 2006. But GlassHouse has also posted net losses each year since 2002, and last recorded a $7.2 million net loss on revenue of $35.1 million for 2006.

GlassHouse's SEC filing also reveals it paid $8.5 million in October to acquire London-based data center services company Data Center Moves International, and a total $10.8 million in stock and cash in February to acquire Israel-based companies MBI Advanced Computer Systems Ltd. and Integrity Systems Inc.