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Violin Memory shares set to open 50 pct lower after results

Friday, 22 Nov 2013 | 9:20 AM ET

Nov 22 (Reuters) - Shares of Violin Memory Inc were set to open 50 percent lower on Friday after the flash storage provider's third-quarter results came in below analysts' estimates, prompting at least four brokerages to downgrade the stock.

Analysts at Barclays, JP Morgan, Pacific Crest Securities and Deutsche Bank downgraded the company's stock, citing weakness in its U.S. government business, higher competition and slower adoption of its server flash products.

Violin Memory's third-quarter results were also hit by the 16-day government shutdown in October.

The U.S. government accounted for 12 percent of the company's revenue in the year ended July 31.

"Violin's revenue deterioration could be a harbinger of more growing pains to come," JP Morgan analyst Mark Moskowitz said in a note, trimming his price target on the stock to $5.50 from $9.

Barclays analysts cut their price target to $5 from $9.

Companies such as Violin Memory and Fusion-IO Inc have been facing intense competition from larger rivals such as EMC Corp, IBM Corp, NetApp Inc, Hewlett-Packard Co and Cisco Systems Inc.

The company, which went public in September, posted a bigger-than-expected quarterly loss as costs rose, and forecast current-quarter revenue below expectations.

Violin Memory was co-founded by Harvard University graduate Jon Bennett in 2005 and is headed by former Fusion-io Chief Executive Donald Basile.

It is backed by Japan's Toshiba Corp, which holds an 11.2 percent stake in the company.

Violin Memory shares were trading at $2.99 in premarket trading after closing at $6 on the New York Stock Exchange on Thursday.

(Reporting by Neha Alawadhi in Bangalore; Editing by Don Sebastian)