San Diego’s Verari Systems Restructuring its Data Storage Business

12/14/09Follow @bvbigelow

PE Hub reports today that San Diego-based Verari Systems shut down on Friday, but a top executive at the company, which provides blade servers and data storage technology, says the doors are still open and that Verari is restructuring its business. Verari is backed by venture investors including Seattle-based Voyager Capital.

“Verari has initiated a process that will protect our customers’ investment and benefit our creditors as we restructure the business,” Dan Gatti, Verari’s senior vice president of worldwide marketing operations, writes in an e-mail this morning. “The intention is to safeguard customers’ investment and provide an ongoing support capability.”

Gatti wouldn’t say much beyond that when I called him, although he says Verari has not filed for Chapter 11 bankruptcy reorganization (or Chapter 7 liquidation). He declined to comment when I asked about layoffs at the company, and I could not find any recent WARN (Worker Adjustment and Retraining Notificatin) filings by Verari with California’s Employment Development Department.

In 2004, the private, venture-backed company told the San Diego Union-Tribune it had close to $100 million in sales and about 265 employees.

Verari told me earlier this year that it has an impressive list of customers (about 95 percent are outside the San Diego area), including Akamai, Microsoft, Qualcomm, Petrobras, Harris, and Lockheed Martin. The company also had shifted its strategy at the beginning of the year to focus on its “green” Forest product, which packages its server and storage equipment in cargo containers to maximize both the computing density and energy efficiency of data centers.

Verari co-founder and chief technology officer David Drigger told me the company has raised three rounds of venture funding, but he declined to say how much Verari has received. PE Hub says the company has raised more than $80 million, with Celerity Partners, Carlyle Venture Partners, Sierra Ventures, and Voyager Capital among the investors.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • ex emplyoee

    Doors are not still open. All employees were terminated as of the 11th. Everyone forced to go on unemployment benefits and the employees lost everything, vacation time and stock options if we had some. All gone. Notice Gatti says nothing about the restructuring benefiting the employees in his entire statement. Thanks for everything Dan! Merry Christmas. All the management team deserves this Christmas is large lumps of coal.

  • exverari

    Doors are not still open. All employees were terminated as of the 11th. Everyone forced to go on unemployment benefits and the employees lost everything, vacation time and stock options if we had some. All gone. Notice Wright says nothing about the restructuring benefiting the employees in his entire statement. Thanks for everything David! Merry Christmas. All the management team deserves this Christmas is large lumps of coal. 16 VP’s are what lead to our demise. All of Wrights buddies that he brought on board 3 years ago with high 6 figure salaries, including his secretary of all people, caused this along with a lot of execs not living in San Diego so they all lived in Hotels. Charged all back to the company along with their food, rental cars etc… The technology is great and solid and this should never have happened. I sort of wonder if this was Wrights goal the entire time. Run the business into the ground, terminate everyone and then pick up the container business for himself and screw everyone else except his buddies. Noticed in a few other posts that he mentioned investors wanting to pick up the container business and hiring back some emplyees for this. Just wonder if it is David Wright as the “investor”. if thats the case, he needs to be prosecuted. A lot of lives were crushed last friday… Shame on you David Wright.

  • anotherExEmp

    All employees were terminated on Dec 11, 2009.

    Since you mentioned WARN. Verari would have used the “faultering company” exception to escape this law. However they still violated WARN, as they did not provide a proper notice of a mass layoff. Since termination was performed on an all-hands conference call, a verbal announcement does not satisfy WARN requirements

  • YetAnotherExEmp

    I’m tired of all these “restructure” stories. There is nothing to restructure as Verari is dead. All employees were let go. Reports that the founder left are dumb as the company died so nothing to leave. Ive known Dave for over 3 years and he wouldnt leave if there was something there.

    Not only were all employees let go but all have been bent over by terrible exec managment that owes everyone money (missing paychecks, PTO hours, and more). IMO this was a plan put in place a while ago. Sell of the parts for cheap after Verari dies rather than having a company buy a company in debt. I hope there is a department to look into this type of thing and make arrests! Look into the ties between the management that let the company die and the company that might buy the parts! If this were a public company the SEC would be putting handcuffs on people, staring with just about everyone with “VP” in their title.

    It wasnt fun being in the office that last week. when execs started clearing their offices we all knew it was over.