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Technology Stocks : Network Appliance

NTAP 109.28

-2.0%

Nov 26 3:59 PM EST

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To: riposte who wrote (10057)	4/21/2002 3:55:30 PM
From: Elroy	of 10934

Well, it seems to me your two points are wrong. 1. IT spending has not screamed to a virtual halt. IBM did $18 billion in Q1 and was profitable. CSCO will do about $5 billion and be profitable. SUNW just reported about $3 billion at about break even. Halt means zero. Quarterly IT spending is comfortable BILLIONS of dollars. I think your point is that current revenue rates are below the rates of the last year or two. That is certainly true, but well run companies can make money on $50 million in sales or $50 billion, as long as they have their cost structure appropriately aligned. 2. Just because every other company is targeting the leader in NAS doesn't mean NTAP will experience price pressure. If NTAP's technology is good enough and they can make a better product than the many new entrants, customers will pay for it (as they did CSCO gear when everyone was going after networking in the mid-1990's). On the other hand if there is nothing really special about NTAP's products, then commoditization and price pressures will set it (like in PC's in the late '1990's).Depends on how much of a technological lead NTAP really has. Elroy

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