Original URL: http://www.theregister.co.uk/2009/08/19/copan_sales_office_reduction/

Copan silence prompts sell-off rumours

Looking for a buyer, not a leader

By Chris Mellor

Posted in Storage, 19th August 2009 11:51 GMT

Copan, the high-density persistent storage array vendor, has sunk into virtual silence since parting with its CEO Mark Ward a month ago, prompting rumours that its backers are looking for a sale instead of a new CEO.

Copan produces Revolution storage arrays using MAID - Massive Array of Idle Disks - technology. These arrays can pack disks much more densely in rack shelves because 75 per cent of them are idle at any one time and so are not generating heat.

This technology, with disks spinning or idle, is unique to Copan. It can pack many more terabytes of raw capacity into a rack than any other hard disk drive array supplier as a result, and at a much lower energy cost per square foot of data centre floor space.

The spun-down disks require a little time to spin up when data on them is required. Competitors such as Nexsan offer a graduated form of MAID with intermediate power-saving drive states that respond to data access requests more quickly.

Ex-CEO Mark Ward initiated an expansion of the company's sales infrastructure and its software development capacity, but he was let go in June after revenues didn't rise fast enough to pay for these investments. It appears that the rate of revenue rise, taken together with the recession, indicated that breaking even was looking some way off.

Before Ward left there had been lay-offs, enforced leave and other cost-saving measures as the board pressed him to reduce spend.

There are ten investing firms who have collectively put in $106.9m funding since Copan was founded in 2002. Four of the five board positions are held by representatives from the venture capital community. The president of the board appears to be one of these, Amish Jani, with the fifth board member, the chair of the financial audit committee, being Robert Kocol, ex-chief financial officer of StorageTek.

Copan's website shows that the money men rule the board end-to-end, with no company founder or employee present now that Ward has gone.

The board's concern will be cash burn and getting a return on the VC's investments.

A source familiar with the situation said: "Investors were unhappy they didn't get a return on their investment like Data Domain, and that (CEO Mark) Ward had been shopping the company for a while with no takers, or rather offers they felt were fair."

It is believed that IBM was one of the potential buyers, and that there was: "a big deal cooking with IBM a while ago that was going to bolster the company's fortunes, but it fell through."

The rate of cash burn could be behind the current state of affairs in Copan's sales offices.

Copan's foreign sales infrastructure, set up during Mark Ward's CEO reign, appears to be either defunct or hibernating. Calls to its UK and Germany sales offices are met with messages saying the number is temporarily unavailable (Germany) or requesting you to leave a message (UK). Aimee Welstead, Copan's international marketing director based in the UK, left in January.

Neil Ledger, the director of Copan's UK distribution partner VADition, said: "We haven't dealt with Copan for two months. I think you'll find the UK office has closed down." He didn't want to say anything else about Copan.

Copan announced certification by video system supplier SGL UK in April. A source there said: "I have heard through the grapevine that Copan was having major problems."

The CEO of Copan channel partner Comparex Belgium, Lieven De Smedt, said Copan is still operating: "as far as I know. We've recently been in contact with them," and mentioned a phone call to its French office two weeks ago. However the main French office number is no longer answered by Copan and the Copan France mobile phone number is on voice mail.

There is no response from its office in China, the Singapore office number is no longer in service and ringing the Korean office gets you a "wrong number" response.

That leaves the five offices in the USA.

The Southboro, Mass office phone did not answer the phone. The New York office number instantly terminates the call. The Texas office number is an executive office suite and the receptionist says Copan has moved and left no forwarding address. The Washington DC office does take calls and staff there, under the management of Kelly Welch, say Copan is still operating. Further queries were referred to company headquarters in Longmont.

The company headquarters in Longmont is operational and the technical support line in the USA is still in operation.

There is no external PR agency acting for Copan. A contact at Copan's last listed US external PR agency, Inkhouse, said: "We stopped working with Copan when their VP of Marketing left." That refers to Bill Mottram, who left in May, 2008. Notwithstanding that, Copan's last press release, dated April this year, the one listing the SGL UK certification, still listed Inkhouse as its PR agency.

Calls and mails to company representatives about the situation have not yet been been answered.

It seems that Copan HQ is cutting its sales office infrastructure down to the Washington DC office, possibly for federal systems sales, and still maintaining its technical support facilities while trying to arrive at a workable solution to the company's problems.

Possible outcomes seen from here include Copan shrinking its operations to become a much smaller company. If that were the case then it could be a long time before the VC's received a return on the dollars they have put in.

Copan could also be looking for a possible company sale - or marriage, if you will - with the funding venture capitalists getting whatever they can from a yard-sale of Copan's assets.

If that last alternative happened, Copan would would effectively disappear. That would be a dreadful end to a highly promising technology, and a disheartening blow to the venture capitalists who have shown faith in Copan by voting with their wallets.

It would also be a cruel end to the hopes of the founders and the careers of many people who have been working to develop, sell and support the technology and the company. ®