StorageNetworks, Inc. (STOR) Message Board

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Technology Stocks : StorageNetworks, Inc. (STOR)

STOR 32.21

0.0%

Feb 3 4:00 PM EST

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To: Glenn Petersen who started this subject	7/21/2000 12:33:20 PM
From: The Other Analyst	Read Replies (2) of 187

Market cap of this company ($14 billion)has surpassed the projected market size ($8 billion). From the STOR prospectus: These new technologies have created the opportunity to establish a storage area network that can free businesses from the need to build and operate their own internal data storage infrastructures. By storing and accessing their data through a global storage network established and managed by a third-party provider, businesses can cost-effectively satisfy their data storage requirements and thus focus on their core competencies. We believe that there is significant market opportunity for a company that has both the infrastructure and expertise necessary to provide comprehensive data storage services to data-intensive businesses. Dataquest estimates that the storage utility market will grow to $8 billion by the end of 2003. Counting about 10mm shares from options and warrants that are in the money, the company has nearly 100 million shares outstanding. Times $140 per share recent price is $14 billion market cap. But the market it is addressing is only $8 billion according to the Dataquest estimate quoted above. Meanwhile, there are many competitors. The margins are not going to be huge in this business. STOR will have marketing, operating, and interest costs on its large capital outlays. This seems to me to be the kind of business that will mature in valuation at 2 to 4 times revenues, not 10 or 20 times. Granted the $8 billion could grow after 2003. But STOR is not going to have a big share. Might be a good short. But maybe wait until the quiet period ends and the first batch of analyst reports comes out. Anyone see something I am missing? I also noted in the prospectus that CEO Peter Bell was very actively promoting the story before the quiet period began. That is usually a good sign for a short candidate.

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