Let's see. 6+3+4=13 so you mindlessly parrot the company line? LOL.
1) DSO = Days Sales Outstanding
DSO = [Accounts Receivables/Sales] x 90 days
2) Accounts Receivables grew faster than Sales in 3Q2001.
Was this a one-time event? No.
Sales grew 16% from 4Q2000 to 1Q2001 yet AR grew faster
at 27%.
Sales grew 13% from 1Q2001 to 2Q2001 yet AR grew faster
at 17%.
Sales grew 11% from 2Q2001 to 3Q2001 yet AR grew much faster at 37%
Sales are expected to grow around 10-12% from 3Q2001
to 4Q2001. Current guidance is that sales growth for
FY2002 will be 55% to 65%, or between 16% to 19% a
quarter.
NTAP Sales/AR
Sales Q2Q AR Q2Q
4Q2000 200.0 32% 108.9 9%
1Q2001 231.2 16% 138.2 27%
2Q2001 260.8 13% 161.9 17%
3Q2001 288.4 11% 222.6 37%
4Q2001 ? 10% ? ?
1Q2002 ? 16% ? ?
2Q2002 ? 16% ? ?
3Q2002 ? 16% ? ?
4Q2002 ? 16% ? ?
The fact of the matter is that you have an emerging
trend that sales are slowing down and competition
is increasing forcing NTAP to sweeten the terms
under which it sells its products.
Based on $288M in revenues and approximately 1,600
deals closed during the quarter, the average NTAP
deal size is about $180,000 so we're not talking
about particularly large deployments here. NTAP
is a mid-range player. The mid-range is typically
defined as the companies with 5 to 100 servers.
Furthermore, 40% of NTAP's revenues come from the
dotcom market. In its earnings report, Cisco
indicated that current sales to dotcoms are at
around 50% of last year's levels and at around 33%
of its internal projections for the current year.
You do the math.
Put simply, NTAP is faced with the challenge of
reining in its receivables and its ability to
sweeten its deals during the next few quarters at
a time when the competition is intensifying.
For example, there are anecdotal reports that EMC
is pricing the high availability IP4700 at least
20% under the single-point-of failure F840.
Expect even more aggressive pricing as EMC
catapults its reseller partners off to a good
start. EMC buys more components and can push
more software behind its hardware.
NTAP has consistently maintained that it is not
seeing any competition and in particular, that
their win rate against EMC keeps on improving at
80+%. This is a marketing sleight of hand that
seems to have worked very well with the NTAP
faithful. The numbers, however, tell a
different story:
Networked Information Storage (SAN/NAS)
1999 2000
EMC 20.3% 30.5%
Sun 18.5% 9.8%
NTAP 14.5% 13.7%
Compaq 13.2% 12.1%
HWP 4.9% 6.3%
IBM 2.6% 6.7%
Others 26.1% 20.9%
Total $2.8B $6.6B
Source: IDC
NAS Market Share
1999 2000 +/-%
NTAP 49.0% 48.6% 0%
EMC 24.0% 29.4% 22%
Auspex 7.8% 1.9% (76%)
Dell 2.4% 3.1% 29%
Source: IDC
The converging SAN/NAS market grew from $2.8B in
revenues in 1999 to $6.6B in revenues, or by 136%
yet NTAP lost market share from 14.5% to 13.7%
primarily because they invested seriously under-
invested in the SAN market.
The NAS market grew from around $850M in 1999 to
$2.1B in 2000, or by 147% yet NTAP's market share
remains stagnant. A disruptive technology ain't
supposed to act this way.
Since NTAP fans are quite naturally eager to
compare NTAP with EMC, here are the numbers:
EMC vs NTAP - NAS Hardware
EMC Q2Q NTAP Q2Q
1Q2000(CY00) $ 90 - $148 - 4Q2000 (FY00)
2Q2000(CY00) 100 10% 171 16% 1Q2001 (FY01)
3Q2000(CYOO) 148 48% 193 13% 2Q2001 (FY01)
4Q2000(CYO0) 210 42% 213 10% 3Q2001 (FY01)
EMC NAS Hardware:
1) Symmetrix/Celerra HighRoad (high-end)
2) Symmetrix/Celerra SE (high-end)
3) IP4700 (mid-range)
EMC has no caching products and all software revenues
are booked under EMC Software (MRQ: $483M)
NTAP NAS Hardware:
Caching accounts for 9% of revenues, software
accounts for about 17% of revenues and hardware
accounts for 74% of revenues. NTAP does not have
any high-end NAS products.
The difference between EMC and NTAP is that NTAP
likes to brag about its 80% win rate against EMC
and take gratuitous potshots agains EMC's
management ("naive"), EMC Engineering
("monolithic, mainframe, aging") and EMC Sales
("not so smart"). EMC, on the other hand, likes
to brag about its 99% customer retention rate
based on its 99% customer satisfaction rankings.
That alone, my friend, will make all the
difference in the months ahead. |
