Hello BirdDog and thread, FYI ...
I've just started looking at NTAP since one of my services, Apogee Research, put a short sell on it. They bat around .800 on their short calls.
apogeeresearch.com
Here's a snippet, they will release their full report next week and I'll post a link here but I'm not sure if non-subscribers will be able to access it. I'm interested in what posters on this thread think of this ...
Network Appliance Inc. (NTAP)
Recommendation: Maintain short position in Network Appliance entered on April 9.
Network Appliances (NTAP) provides network data storage solutions through a combination of hardware and software. We will issue a full report on this company next Friday. In the meantime, we offer the following brief preview.
NTAP sells for an extremely optimistic multiple of revenues and earnings despite (1) a declining operating margin, and (2) an eroding asset turn.
While EMC Corp. is not exactly comparable to NTAP, it is similar. But EMC's revenues are over eight times those of NTAP and it is the world's largest maker of computer data-storage systems. And according to a March 2002 report by Gartner Dataquest entitled, "2001 Storage Management Software Market Share," not only is EMC the dominant operator in the data-replication and storage-management software space, but it appears to be gaining market share. As the dominant operator, EMC should trade at a premium multiple to NTAP, not the other way around.
Intensified competitive rivalry, coupled with adverse macro demand, has devastated NTAP's operating margins, notwithstanding the uptick in the latest quarter.
In addition, declining sales coupled with growing assets has led to a slowing asset turn.
Might operating margins and asset turn improve along with the economy? They might, but Fred Hickey's evaluation of the tech industry (see below) argues persuasively to the contrary. We'll have much more to say about Network Appliance when we release our complete report. Stay tuned.
Here's a link to Hickey's report. Can you access it without a subscription?
apogeeresearch.com |
