I finally had a chance to hear the conference call tonight. To me, the quarter was a mixed bag.
Thanks to Vivant, and it's great margins, MTI easily cleared the earnings hurdle. The problem, as I suspected, was revenue. MTI missed this number, and surprisingly, repeatedly refused to give the large and involved group of analysts on the call revenue guidance for this or future Q's. I can't think of a worse way to raise concerns or alienate a group potential allies.
Due to the revenue shortfall, MTI had a larger jump than expected in on-hand inventory. This didn't go over too well either. Neither did the fact that their European sales group dropped the ball (again?). Meanwhile, EVERYONE in the industry is beating their revenue targets.
They scored 12 new "major deals" in the quarter, five of which were new accounts. That's a promising trend. Let's hope it continues. ASP's also rose nicely from $111,000 to $140,000 and 35% of all Vivant deals included a Datashield license. MTI thinks that number will rise substantially in the future.
MTI has 108 salespeople, 73 in the US and 35 in Europe. This represents a net increase of 36 in 1999. By my math, that comes out to about $500,000 per rep for the quarter. Barf city. Even taking out all the new reps, the revenue/rep number looks like it could use a little viagra. Remember, we live in an age of million+ dollar deals and MTI is supposedly focused now on the data center (not the work group) with the 6700.
Bottom-line: Jury's still out on MTIC. And the recent stock action (or lack thereof) seems to support that. They have a very solid product and we all know the market has an insatiable storage appetite. Moreover, the world needs (and probably wants) a viable independent alternative to EMC. Yet, they need to hire, train, and inspire a killer sales force (I think I said that two years ago) and then figure out how to compete effectively in the big shops while putting a good bite on EMC's ankle. Lot's to do over the next few quarters!
On a side note, Earl Pearlman, CEO, remains an utterly uninspiring figure. Every time he opens his mouth, I glaze over. This company needs a motivator, a visionary, a rule-changer. Earl is a talking head, at best. What's worse, three times during the call he asked for a question to be repeated. Earl? Hello? Are we keeping you from something more important? I'm more convinced than ever that with all the uphill challenges facing this company MTI needs with a proven leader at the helm.
I don't mean to complain too much or highlight negative issues. MTI is doing lots of good things. But as an ex-EMCer, I think I have a hightened sense of what they're up against. Without a strong CEO, Sales VP, and equally strong sales crew, it's a life of low-hanging fruit for MTI. And that means NO on entering the big-time and a 10-bagger in three years.
BV
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