Re-Post from ANCR Thread...looks bleak for Vixel shareholders unless VIXL can pull off a "Tier 1" switch OEM with someone like AAA Engineering..until then I vote that BotHELL be re-named VixHELL:
To: Kerry Lee who wrote (25270)
From: Alan Bershtein
Thursday, Dec 23, 1999 1:05 AM ET
Reply # of 25278
Excepts from SSB research dated 12.22.99... Keep in mind SSB covers ZOOX and BRCD. SSB does not cover VIXL or ANCR.
Gadzoox Networks (ZOOX $50.56,3-H,Tgt $90.00) John C. Dean
--SUMMARY:--Gadzoox Networks--Computer Storage
*Vixel (VIXL), a Fibre Channel networking company, pre-announced that
it expects to report a loss of $0.26-$0.30 per share, consensus
estimates were for a C4Q99 loss of $0.25 per share.
*Vixel sighted customer demand, Y2K and product transitioning as
reasons for the revenue and earnings slump.
*We believe this is a Vixel specific issue and does not have broader
implications.
*The Vixel announcement does not provide us with any reason to change
our estimates for Brocade or Gadzoox. However, we are not comfortable
with our current price target on Gadzoox given the recent decline in
ZOOX. Our price target for Gadzoox is under review pending C4Q99.
<<snip>>
VIXEL'S MARKET POSITION
-----------------------
Vixel entered the Fibre Channel networking market providing entry-hubs,
or dumb hubs. As we outlined in our recent industry report
(Understanding Computer Storage) and in greater detail in our initiation
reports on Brocade and Gadzoox, customers have outgrown the entry-hub
market and began demanding more reliable Fibre Channel networking
solutions with greater features and functions.
The Vixel announcement is very consistent with what we have been saying
both verbally and in our reports. We believe Vixel's announcement is
company specific and does not have broader implications.
<<snip>>
We believe that current SAN networking demand is focussed around managed
hubs, although customers are once again raising the bar for increased
features and functions. Customers are demanding products that will be
able to scale as they develop their new Storage Area Networks (SANs).
Upgradable storage networking devices are the next logical phase.
Companies have responded to demands by developing upgradable FC-AL
switches. Ancor, Brocade and Gadzoox have all set out to satisfy this
demand with recent product launches.
We believe that the entry hub market is all but gone, the managed hub
market is on its way out and the FC-AL upgradable switch market is just
beginning to develop and will represent the bulk of customers demand in
2000.
We expect FC-AL switches will be a comfortable next step as customers
migrate from managed hubs to fabric switches (note: we believe fabric
switches will be the ultimate customer demand). We find evidence that
this emerging market presents real growth opportunity in that various
fabric switch vendors (Brocade and Ancor) and managed hub vendors (Gadzoox
and VIXEL) have launched products into the FC-AL switch market.
<<snip>>
The challenge for Gadzoox will be if the managed hub market tapers off
more quickly than anticipated (which would likely result in a rough
product transition). We do not believe the managed hub market will taper
off as quickly as the entry hub market has; however, we believe it is
important in the next six months that Gadzoox: 1)provide its Capellix
fabric upgrade and 2)announce the development of a native fabric switch.
BROCADE POSITIONING
-------------------
Brocade is currently the number one supplier of SAN switches with an
estimated 75%-80% market share. Brocade has dominated the SAN fabric
switch market. Full fabric switches are essential to the development of
large scale SANs. Brocade has targeted the full fabric switch market
since the company's founding in 1995.
Brocade's ability to offer a broad spectrum of products including: FC-AL,
entry fabric and full fabric switches gives it a clear market advantage
over competition. One of the real values Brocade provides its customers
is scalability with each switch it offers. For example, Brocade's
low-end SilkWorm 2010 FC-AL switch can be bought just above managed hub
prices (approximately $700-$800 per port; end-user price) and later
upgraded to a full fabric SilkWorm 2050 by paying a fee for a software
key.
We believe the flexibility in Brocade's product line is one of the key
differentiators that should keep Brocade in the forefront of storage
networking.
<<snip>>End of paste |
