BV, and all, I thought perhaps this report on CRDS that you supplied the written form to may apply in part as a bullish view to ADIC and storage in general.
It may have been posted here but worth a second read just for the lift it offers a long term investor in Storage<grin>
From Friday, March 3rd. (ON24/TheOnlineInvesment.com)
Audio link: biz.yahoo.com
Text, I have inserted the bold font :
<<Crossroads Systems: Another SAN Superstock?
Crossroads Systems (CRDS) has generated a buzz with investors ever since it went public last October. This company dominates the market for routers used in Fibre Channel storage area networks (SANs), a blistering-hot area that has spawned several superstocks like Brocade. Crossroads soared from an $18 IPO to $155 currently, giving it a market cap of nearly $4 billion. Not bad for a company with just $24 million in sales.
It would be easy to dismiss this as another story about insane stock valuations, but the market addressed by Crossroads is so important and potentially explosive that it's worth knowing about even for those who think the valuation of CRDS stock is nuts.
The need for data storage is nothing new, and investors have been finding ways to capitalize on it for years with stocks like EMC, Veritas Software and Legato Systems. The storage story is far from being played out, though, and whether or not the aforementioned stocks continue to soar, demand for next generation storage solutions appears to be at an inflection point.
This is driven, first and foremost, by the sheer amount of data being generated and transferred across networks. The advent of broadband Internet connectivity not only accelerates demand for data storage but is also spurring the proliferation of data-intensive content like video and audio on the Internet.
But it's not just Internet traffic behind this. The thousands of companies that installed Enterprise Resource Planning (ERP) systems over the past several years are producing massive amounts of data that need to be stored, protected, and easily retrieved. Efficient data management is even more critical to e-commerce companies that must access data immediately and reliably for such things as transaction processing and data warehousing.
Legacy storage systems simply aren't cutting it anymore, with their centralized architecture based on the SCSI (pronounced "scuzzy") protocol. They are slow, limited by distance and connectivity restrictions, can bog down a network, and scale inefficiently. Companies are rapidly migrating to the Fibre Channel SAN standard with its distributed architecture because it offers significant performance, scalability and flexibility advantages versus legacy systems. For example, Fibre Channel is compatible with both copper and fiber optic cable (SCSI only works with copper) and supports multiple protocols, so enterprises don't have to abandon existing storage system investments when they add Fibre Channel SAN capacity. SAN
architecture also allows storage capacity to be added without additional server/processor power, unlike the old SCSI standard in which the number of storage devices connected to a server was relatively limited (you had to add servers as you scaled storage).
Crossroads specializes in Input/Output (I/O) technology. Its SAN routers are an important component to the benefits of Fibre Channel and its compatibility with existing SCSI systems. The company dominates the Fibre Channel router market with an estimated 75% share. Crossroads has a dozen OEM customers including Dell, Compaq, ADIC, HP, Exabyte and StorageTek, all among the top storage vendors.
The company recently reported sales of $8.7 million in its first quarter of fiscal year 2000, nearly triple the year-ago figure. So while the absolute level isn't that big, the rate of growth is what has investors excited. Most industry watchers figure the market for Fibre Channel SAN products is in its infancy. IDC estimates Fibre Channel will grow from 20% of storage interconnections last year to 60% by 2002. With storage capacity expected to grow about six-fold in that time, IDC figures the market for products based on Fibre Channel technology will blossom from $2 billion in 1998 to $15 billion in 2002. Simply put, the growth potential for Crossroads' market is enormous, and its dominant position in the router space positions it well for the harvest.
We won't go into whether Crossroads is overvalued at a current price of $155 (market cap of almost $4 billion) because by all traditional valuation guidelines it is off the radar. It's still a year away from profitability and trading at more than 100 times revenues. Suffice it to say that investors know this company is parked in front of a gigantic opportunity created by three factors: the next generation of enterprise storage technology; the hockey-stick pattern of accelerating storage demand; and the
increasingly mission-critical role of data storage and retrieval solutions. Some investors with the risk tolerance and optimism about these sorts of unprecedented opportunities are participating. Even those without the boundless enthusiasm should know about this major technology shift toward Fibre Channel SANs, whether for the evaluation of current holdings or for future investment opportunities in the same arena.-- James Hale>>
I like bullish storage hype!<g>
Puna |
