SSB OPINION:
"Recently there has been much debate about whether storage
stocks are the last man standing or immune to potentially
eroding IT spending. In our view its somewhere in between,
which is why we are cautious for the near term and excited
about the longer term. When the dust settles, we continue to view storage as one of the best places to invest and continue to believe in the excellent long term growth prospects for the industry, particularly the leaders: Brocade, EMC, NetApp and Veritas. While we believe that leading storage companies are insulated from a potential economic pull back, we do not see them as isolated. If there is a sharp pull back in domestic IT spending, we expect storage demand to be negatively impacted. However, under such circumstances we believe storage should be
among the more insulated sectors due to the increasing
importance to move, backup, manage, and access greater amounts of data in more ways and more often. Underneath near term economic concerns, we continue to be excited about the long term growth prospects of the data storage industry. The major demand drivers are: 1) the increasing use of the Internet, which is being propelled by email, video streaming, increased bandwidth availability, reduced bandwidth costs and an insatiable demand to access data; 2) the trend to automate computing environments, which brings a higher ratio of storage capacity consumption; 3) B2B
expansion; 4) brick and mortar companies expanding onto the
Internet; 5) emerging technologies such as digital
photography, video conferencing, MP3 files, set top boxes,
handheld/wireless devices, and voice recognition software; and 6) increasing international penetration. We believe storage will be one of the most explosive areas of growth over the next five years."
- Fred |
