Egenera, a pioneer in the blade server market, has scrapped its plans to go public.

The company specializes in pooling blade servers into a utility computing environment where workloads are shifted according to application demands. It launched its BladeFrame product in 2001.

Egenera withdrew its filing for an IPO last month, citing market conditions. It initially filed for an IPO in June of last year when the market appeared to be on an upswing and the company expected the offering to be worth about $125 million.

“Right around the time we filed, the market went south on us again and has been going sideways at best since then,” says Thomas Sheehan, Egenera’s CFO. “It has just been a very unattractive market. … In the last several months, it’s just been miserable.”

Just days before pulling its IPO, Egenera announced that it had received $35 million in new funding. Horizon Technology Finance said that it would provide up to $15 million of long-term funding and Silicon Valley Bank extended the company’s existing credit line from $10 million to $30 million. Egenera has raised $124 million in private equity since it was founded in 2000, Sheehan says.

While the new round of funding wasn’t a key factor in the decision to pull the IPO, it “really is a bit of insurance for us,” Sheehan says.

“Our plans and our projections showed we really didn’t need this incremental funding,” he says. “But it gives us some flexibility going forward so that if we want to grow more aggressively than our existing plan, this could fuel that growth.”

The company, which has yet to post a profit, initially was focused on the securities industry. In fact, customers Credit Suisse First Boston, Goldman Sachs & Co. and JPMorgan were to have been the underwriters for Egenera’s IPO.

Today, however, Egenera’s business is more diversified, with customers in media, government, telecom and healthcare, Sheehan says.AOL and Savvis, for example, are Egenera customers.

“We did have a fairly high concentration of our revenues in the securities industry,” Sheehan says. “But now there is very little reliance on that segment. We’ve diversified our business into many other industry segments.”