Verari Restructuring, Lays Off Most Employees

Verari Systems, which makes data center equipment, including servers and storage systems, has laid off the bulk of its employees as it looks to restructure its business. The company has been hit by the current credit crunch, according to its CEO. Rumors had been circulating for days that the company had gone under, and Verari employees are using the Internet to stay connected.

Server maker Verari Systems is undergoing a restructuring that has led to the layoffs of a large portion of its work force and put into question its future viability.

Currently, a number of employees are still working in Verari's San Diego, Calif., headquarters to deal with a backlog of orders and to develop a plan that will benefit the company's customers and partners, President and CEO David Wright said in an interview.

"We have customer orders we're working with, and we're also working with our business partners," Wright said. "In all reality, it not rosy, but it's not all vinegar."

However, what the company will look like next month has yet to be figured out, he said, adding that Verari has not filed for bankruptcy protection.

Questions about the health of Verari reportedly began to be asked in November, when the company did not appear at the Supercomputing 2009 show in Portland, Ore. On Dec. 11, Wright called a meeting of all employees to tell them about the restructuring plan, which included laying off most of the workers.

Wright wouldn't give exact number of the layoffs, but said it was a "major percentage" of the work force.

The week of Dec. 7, rumors began circulating that Verari was shutting its doors. On Dec. 10, a Website called VerariAlumni.com was created, initially saying that the company was closing. That has since been changed to talk about a restructuring.

As of Dec. 14, 83 Verari employees had signed up on the networking site.

In addition, an employee calling himself VerariGuy has been posting messages on Twitter about the company. In one post, he said that at peak, about 300 people worked at Verari, but that that number had dropped to 225.

In September 2004, when Verari closed a round of funding that raised more than $13.27 million-bringing the total raised by the company to almost $34.2 million-the company said it had 265 customers and more than 4,000 customers. Verari currently counts Virgin America, Morgan Stanley, Wachovia, Akamai, Microsoft, Qualcomm, Johns Hopkins, EMC, Lockheed Martin and Northrop Grumman among its customers.

Some former Verari employees also have been leaving posts at the InsideHPC Website.

Wright said the company's problems have been more about cash flow than business. Verari has orders in the pipeline worth multimillions of dollars, but that for the past two months, it has had problems getting credit, hobbling Verari's cash flow, he said.

The layoffs were the result of the company being unable to meet the payroll, Wright said.

Now he and the other employees still left at Verari are working with banks and other business partners to determine the company's future, whether that means it remains independent in some fashion, is sold as a whole or in pieces, or whether it's broken up into multiple entities.

"It's premature to try to say what it will be," Wright said. "I believe in the next two weeks we'll be much clearer."

More details on the company's direction will come to light in the next couple of days, he said.

The company, which has been around since 1996-though known as Verari since 2004, changing its name from RackSaver-sells a host of server BladeRack products aimed at compute-dense environments that offer high performance and energy efficiency, as well as a line of DataServer storage products. Verari, which in May was named as one of the top 10 technology companies to watch in 2009 by Bank Technology News, also sells DataValet, an integrated hardware and software storage solution.

The company also sells the Forest containerized data center, which can house more than 2,880 servers or 26 petabytes of storage in a 40-foot-by-9.5 feet modular container that can be put on the back of a tractor-trailer and shipped anywhere.

Verari is one of a number of OEMs-including Hewlett-Packard, IBM and SGI-that offer these self-contained data centers. Wright said that Verari recently had seen demand for the Forest containers grow, from both the private sector and government agencies.

On Dec. 1, Verari announced that NASA's Ames Research Center had selected a Verari data center container that will house Cisco System's UCS (Unified Computing System) for the first phase of its Nebula cloud computing platform.

"It's been good for us," Wright said. "We have been seeing that part of the business really take off now."

Wright came to Verari in June 2006, taking over from founder and then-CEO Dave Driggers. Wright came over from storage giant EMC, where he served as executive vice president for strategic alliances and global accounts in the Office of the CEO. Prior to that, he was president, chairman and CEO Legato Systems before it was bought by EMC in 2003, and president and CEO with Amdahl.