But it's so ludicrous. The stock has gone from 152 to 18, and they are still acting like a team of cheerleaders, shouting over and over, "GO, NTAP, GO!!!!!!!!!!!!!!!"
Jacob,
The rational long-term investor will know why he or she owns a particular security, and sell only if the underlying story changes. He or she will not sell simply because the stock price (i.e. the market's perception of the story) falls. You've heard the old saw about CSCO dropping 40% several times in 1990's. While NTAP has fallen more than 40%, NTAP's 80% decline in today's market is probably comparable in shock value to a 40% decline back then. Clearly, the lesson isn't to take a huge decline as a sign of strength. The lesson is: it isn't necessarily a sign of weakness either. It could be a sign of weak hands folding, as it apparently was with CSCO.
As for the question of whether the underlying business has changed drastically for the worse:
You & others have pointed out that we may be in the midst of a serious slowdown, and that NTAP's customers won't be immune to it, which will necessarily affect NTAP. While others have pointed out that NTAP's low-cost solution may in fact gain share during a slow-down, the more important issue is this: I expect NTAP's cash flow ten years from now to dwarf those in the next few years. As such, I place relatively little weight in the happenings over the next few years, except insofar as they affect NTAP's long-term prospects. In other words, I'd view a reduction in share to be a potentially serious long-term problem, but a reduction in cash flow without a reduction in share to be no big deal. |
