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Technology Stocks : Network Appliance

NTAP 111.56

+1.1%

3:59 PM EST

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To: DownSouth who wrote (1622)	11/19/1999 1:23:00 PM
From: HDC	Read Replies (1) of 10934

DownSouth, Hi! Thanks for the cc notes. I just listened to the cc again and your notes were a great help. “Congrats on growing faster as you get larger.” You gotta love that line from Don Young at PainWebber. He was the analyst who downgraded EMC a few days ago due to Y2K concerns and received a PR tongue lashing from EMC and others. At the same time he reiterated his Buy rating on NTAP and raised NTAP's price target to $120. The tone of the cc reminded me of the many previous cc's from Dell where they talk about their structural competitive advantage using their "Direct" model and "don't-build-it-until-after-you-sell-it" philosophy. Dell has grown in a few years from a few million in annual sales to what should be $25 billion this year using this SAME STRUCTURAL COMPETITIVE ADVANTAGE. Dell's competitors still can't do much to change their competitive disadvantage. Dell still has more room to grow significantly in the future. NTAP appears to me to have a similar structural competitive advantage. Their competitors have not been able to match them on performance, reliability, and ease-of-use. They said that they haven't seen a new competitor in over 18 months. You and I both know what they are doing to their current competitors. Even with this situation, the fortunate issue for all the players is that the WHOLE MARKET FOR STORAGE IS EXPLODING. Given that, plus the fact that NTAP is gaining more and more recognition as a storage supplier leads me to believe that we have blue skies above! Do you have an idea of how much money is spent on computer hardware each year? I am specifically interested in the server and storage space which would exclude PC's and mainframes(?). Dan Warmenhoven said in an interview for TheFool.com last February that their potential market for filers was $9 billion. That figure seems low to me. Any thoughts? Best, Duncan

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