Network Appliance sees a vulnerable EMC (NTAP, EMC, IBM) By Thom Calandra
Network Appliance CEO Dan Warmenhoven said he hopes to maintain its profit margins for the computer storage company in the current technology downturn. "Our margins are 55 to 60 percent and I think they´ll stay there," Warmenhoven told an audience of technology executives in Rome on Tuesday. Of market leader EMC Corp. he said, "I don´t think EMC can do that with its cost structure." Warmenhoven also criticized EMC´s products. "EMC products are fairly antiquated, 10-12 years old. The new modern (storage) architectures are much smaller," he said. Merrill Lynch this week lowered its profit and sales estimates for EMC, noting that the Boston-area company might have to lower prices for some of its software products. Goldman Sachs has also lowered estimates for EMC, pointing to the Sept. 11 terrorist acts as a deterrent to corporate purchases of large computer equipment. Warmenhoven said a number of companies are horning in on EMC´s business, including IBM and Hitatchi. The CEO said he is hoping for a rebound in the Internet service provider units of the major telecom carriers. British Telecom, France Telecom and AT&T are Network Appliance´s major customers, he said. Network Appliances, which has a market capitalization of about $3 billion vs. $30 billion for EMC, in August reported a sharp drop in quarterly profit, then cut 200 jobs. At the time, the company´s chief financial officer, Jeff Allen, said there would be pressure on gross margins. |
