See: (2 part NTAP shareholder meeting highlights from Yahoo)
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Shareholder's Meeting Summary (Part 1)
by: sirbruce70 (30/M/San Jose, CA)
10/12/00 2:37 pm
Msg: 37663 of 37677
I didn't take notes, but I can provide a summary of the points I found interesting.
Before the meeting some of use took a tour of manufacturing. Things looked very efficient.
It is all basically assembly and testing, and they outsource a lot of it to Jabil Circuit
(JBL) who does somre pre-assembly and also does the smaller netcache units. Eurologic is
of course the other major component supplier. They produce about 70 systems a day and say
they can do 100; that's with only 1 shift a day 5 days a week. So the current facility
with additional employees could theoretically do 2000 systems a week instead of the 350 it
does now.
At the meeting Dan Warmenhoven gave a brief presentation of the yearly highlights, the new
products, and also explained that they now have a complete content management solution,
all the way "from the disk to the eyeball" as the diagram illustrated. With the new netcache
and content management products you now not only have storage on the back end and cache on
the front end, but also the ability to replicate data from the storage to other
storage servers and also to push that data into the cache to support video-on-demand and
related streaming media services.
He said they encountered EMC on about 1/3 of their deals and NTAP won 80% of the time. He
also said that the majority of the UNIX and NT storage space which NTAP can potentially
address was taken up by other vendors, although EMC has a large chunk. He saw NTAP
and EMC both winning by taking market share from those other vendors, who are generally
traditional computer vendors like SUNW. He also didn't see SUNW as a threat - they are
good at selling servers but they are not focused on storage, and they're on their
fourth "Netapp Killer" product.
When asked about EMC and CFLO, he noted that neither has the complete content delivery and
management solution that NTAP now has. Just pieces at either end. A shareholder suggested
EMC buy CFLO; Dan said that would probably screw up both companies. :)
Someone asked about SAN and whether or not it was competitive to NAS, and comparing Fibre
Channel to IP over Gigabit Ethernet. Dan basically outlined as I have here before how
SAN and NAS were complimentary; how NTAP already uses Fibre Channel and SAN in it's
products but between filers. Also he talked about DAFS and how it will fit into the puzzle.
There were a couple of questions about the high PE, and I also asked about the impact of
the acquisitions this was having on the PE since they were not considering the Pro Forma
earnings. Dan gave the usual management boilerplate about how "we run the business and
let the markets take care of themselves" but in response to my question also said that NTAP
had not done many acquisitions and one-time R&D charges in the past and so they were in
the process of educating analysts not to include those in the earnings and to treat
NTAP "like CSCO" which is partially a model for NTAP.
Someone asked about the problem of Seagate being the sole current supplier of disk drives.
Dan responded by saying that Netapp had tried a number of different vendor drives over the
years but that their filers are very hard on disk drives. For instance, the latest SFS97
numbers were something like 300-400 ops per drive whereas the closest competitor was less
than 100. So Netapp places high demands of performance and reliability on disk drives and
Seagate is the only one who can currently meet those, although they have finally qualified an
IBM drive for some of the lower-end systems.
He was comfortable with Seagate being their supplier at this time. They have a good
partnership with them and haven't had any supply problems. Seagate actually now has
Netapp filers at their sites during quality testing of their own drives.
Someone else asked about Quantum (DSS) and if they were a competitive threat and Dan said
basically "no" because they were the low-end. Netapp's low-end is 200GB and about $20K; the
Snap products are half the storage and at a much lower price point. He said that they had
looked at that market for years but was skeptical anyone could make much money at it
given the low margins and the high unit volume required. He also noted that customers with
such minor storage needs don't need a full content and data management solution.
Bruce
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