OT re NTAP:
I'm making a bet on the storage hardware sector, and after studying it, I can't decide who the clear winner will be, EMC or NTAP. EMC has the size and the brand, and their customers are in better shape. NTAP may (just may) have a discontinuous innovation, that does to EMC what Wintel did to IBM. Both of them, IMO, will continue taking market share from the server companies (who are also into storage, but don't focus on it). When it becomes clear to me whether NTAP or EMC will win, I will switch all my holdings into that one. I prefer to hold only the single best company in each sector (actually, in each value chain), but, in this case, I'm not sure who that is. NTAP is riskier, but (if everything good that can happen does) has greater upside potential than EMC. Positives: NTAP has no debt, a pile of cash, hasn't done vendor financing, won't be writing off massive amounts of inventory. They have grown internally, not through making far-too-expensive acquisitions during the bubble. Negatives: In this downturn, profits have just about disappeared. Their customer base is heavy with dotbombs. But, once the macro picture clears (2002?, 2003?), profits could double each year for the following 5 years. |
