VRSN downgraded by Robertson Stephens
Data-Storage, Security Stocks Tumble After Downgrades (Update2)
By Michael Lovell
New York, Jan. 2 (Bloomberg) -- Shares of computer data- storage and security software companies including EMC Corp., Veritas Software Corp. and VeriSign Inc. plunged after Robertson Stephens said reduced spending by customers may cut profit.
Robertson Stephens analysts Dane Lewis, Evren Dogan and Connie Pon downgraded EMC, the No. 1 corporate data-storage system maker, Veritas and VeriSign to ``long-term attractive'' from ``buy.'' Some other downgraded shares lost a fifth of their value or more.
Concerns about a slowing economy will prompt businesses to curb spending on storage and security software in the first half, the analysts wrote in a report. At the same time, large corporate customers can spend less on new computers as competition from Internet-related rivals eases, the analysts said. Personal-computer makers such as Dell Computer Corp. and Gateway Inc. have cut 2001 forecasts already, expecting corporate sales to fall.
``If you believe we will reach a recession, then storage will be hit. Most are not calling for a recession,'' said Mark Kelleher, an analyst at First Albany Corp. who rates EMC and storage rival Network Appliance Inc. ``strong buy.''
EMC fell $9.38, or 14 percent, to $57.13 in late morning trading. Veritas fell $17.94, or 21 percent, to $69.56, and VeriSign fell $12.94, or 17 percent, to $61.25.
Network Appliance fell $12.81, or 20 percent, to $51.38 after sliding to $49.25. The Robertson Stephens analysts cut their rating on the shares to ``long-term attractive'' from ``buy.''
``I'm not surprised to see the downgrades or the (investor) reactions,'' said David Brady, a money manager at Stein Roe & Farnham Inc., which owns EMC and Network Appliance shares. ``On a company-by-company basis, things are still very strong. I would not be surprised, when we look back at the end of this year, that the network-storage guys don't handily beat the estimates.''
Brady sold some Network Appliance shares last year, he said, ``more on concern about market sentiment. The overall fundamentals are still very strong.''
Among other data-storage system makers, the analysts downgraded CacheFlow Inc. and Quest Software Inc. to ``buy'' from ``strong buy,'' and they reduced their ratings on Network Engines Inc., Inktomi Corp. and NetIQ Corp. to ''long-term attractive'' from ''buy.''
CacheFlow fell $2.06 to $15. Quest fell $5.63, or 20 percent, to $22.44. Network Engines fell $1.63 to $2.56, Inktomi fell $4.06 to $13.81, and NetIQ fell $22.13, or 25 percent, to $65.25.
The analysts also lowered ratings on computer-security software makers. Netegrity Inc. was cut to ``buy'' from ``strong buy,'' and Certicom Corp. and Internet Security Systems Inc. were lowered to ``long-term attractive'' from ``buy.''
Netegrity fell $11.13, or 20 percent, to $43.25. Certicom fell $2.63 to $17.75, and Internet Security Systems fell $17.81, or 23 percent, to $60.63. |
