Notes on cc:
International revenue increased from 26% to 28% of bookings over last q.
Europe accounts for 19%, Asia/Pac accounts for 9%. Balance is N America.
Gross margin is 58.8%, a slight decline.
Backlog grew.
Add-on (high margin) software displaced decrease in disk drive margin.
R&D continues at 11% of revenue.
$2M interest income.
EPS $.16 with 834M sh outstanding.
DSO = 61 days, up from 57 days due to increased overseas sales.
Europe grew 28% q to q versus 14% overall.
New account bookings of about 200 = 30% of bookings.
OEM sales (Dell and Fujitsu) about 4% of total, in line with guidance.
E-commerce and ISP applications 25% of total business and increasing.
30% of configurations were clustered configs. 85% of congigs were fibre channel.
NetCache sales were 5% of total, versus 8% last Q. Decrease attributed to change in sales model, creating dedicated cache sales organization.
Win/loss ratio for cache unchanged.
Dan pointed out that growth in E-commerce apps (as compared to mail and news apps) is sugnificant.
GM is expected to deteriorate, though new software add-ons and increased software content may offset decrease in disk drive margin.
Competition:
Continue to do very well agains Auspex (he laughed).
Incidents of EMC as competitition is increasing as EMC goes downscale and NTAP goes upscale. Win/loss ratio against EMC remains constant.
In Cache market, "we just don't ever see Novell". INKT is biggest competitor in ISP market. Cisco and CacheFLow biggest competitors in corporate marketplace.
Y2K:
Sales forecasts from the field do not show a slow down as Y2K approaches. E-business seems to offset any decrease in corporate infrastructure purchases.
New Windows software products will have value add this quarter.
Dan pointed out that the discussion in the press about DGN/EMC having a NAS product is confusing to him. He knows of no NAS product from DGN. Notes, in response to question, that DELL sees EMC as a competitor and it will be interesting to see how DELL sees its DGN relationship going forward.
RE: Cache ASP. ASP is declining. A low price NetCache product is under development.
RE: CSCO as a cache competitor: CSCO solution is not scalable, is low-end, and is not significant threat, though the CSCO sales force is not to be underestimated.
RE: EMC's strategy to criticize NTAP's scalability, NTAP will quadruple its capacity this quarter to end that discussion.
RE; Disk margins. NTAP wants to sell disk drives at commodity prices in order to compete more effectively with the number 1 competitor--SUN. Sun is not a NAS competitor, but it is SUN storage systems that NTAP displaces, so NTAP prices need to be a parity or better against Sun storage systems.
RE: System vendors becoming NAS competitors: Dan's experience and opinion is that they are not willing to commit to R&D to develop an appliance. So HWP, SUN, CPQ, etc will pose no threat. But NTAP is "going after EMC."
RE: Dell OEM performance. NTAP has a "partnering team with Dell", helping Dell sell and learn how to sell the product. $25M is this years target for Del/Fujitsu passthrough sales. Much of the 4% OEM revenue this q was for training and demo units.
An analyst said "I know you have a deal with Brocade, what products will that deal result in?" Dan responded, that he could not respond to the question as he had promised Brocade not to discuss.
My impressions:
These guys are in touch with the business. Their responses were very credible. They are hiding nothing (except the BRCD deal!) They are looking forward to a good quarter.
We need to look at BRCD, Teflon.
|
