I bought brcd recently in the 4.40's area, I knew it was a broken stock, byte&switch was saying the rhapsody merger was going to have to be renegotiated because the brcd stock collapse made the purchase price closer to 100mm than the 175mm original... after the rhapsody merger was announced the CTO, COO etc. at Brocade left so if the merger fell apart brcd was toast wrt executives. Sounds like a bunch of politics over there about their new product direction.
Byte and switch hates brocade and has repeatly declared cisco the winner of storage, based on the inevitability of the decline of fibre channel and the rise in iSCSI, and some other apparent strengths in the andiamo architecture. But it turns out that iSCSI wound up on a bunch of hype lists for 2002 so it isn't really there yet...
The 10 best hype jobs of 2002
No. 5: iSCSI
This was supposed to be the year when Fibre Channel storage area networking technology would start its inevitable decline as it got elbowed aside by iSCSI. But as we're about to enter 2003, iSCSI is still a solution looking for a problem.
Want proof? Cisco Systems, the reigning king of iSCSI hype announced its own family of storage switches this past year that support (guess what?) Fibre Channel only. Users can expect iSCSI to ease its way on to the scene in 2003, and the technology truly does have some promise. But don't expect any more hype about the death of Fibre Channel. Like everything else in the tech world, we'll add new technologies like iSCSI but continue to purchase, operate and maintain the old stuff as well.
zdnet.com.com
On the financials side, brcd has over $3.50 in cash, has been profitable in the past and cash flow positive. A few quarters ago they moved some short term investments to the long term lineitem but these were things I consider to be short term enough(bonds etc), cisco does this too. So a strong cash and profitability position unless their business completely crashes or they have to use the cash to get rhapsody.
So there you have it, lots of uncertainty that I thought was a little overdone, at a time when the market was brutal on news like this. They warned for the current quarter of revs at $125mm and zero earnings at the last quarter report. This is seqentially down from last quarter $151mm- they have never had a down quarterly comparison and that spooked the street. However, that prediction was made at the darkest hour and based on emc and mcdt, things have improved since then. In this week's conference the brcd CFO said pricing had stabilized... "and if we were on a calendar quarter we would be satisfied with the results"... meaning nov and dec were ok- but jan is historically weak.
To me brcd looks a lot like BEAS- a hot company in a sector with big guys all around, and strong, profitable financials. Beas was left for dead last august and has rocked since then. I think these first movers have more of a foothold than some pundits like to believe.
Re: VRTS, as Wizard says storage is going the commodity path except fibre channel maybe ... anyway everything gets commoditized in the longrun and we are all dead <gg>... but there are a few hardware players dueling it out and Dell is there. No question storage is growing though, so vrts is the software play on operational storage, there is no real competition for vrts in the non-IBM shops (IBM has tivoli but my buddies say it is inferior, but as an ex-oracle I am biased)... big oracle shops go vrts always.
IT outsourcing which is going full steam is a heavy storage and veritas user. Maybe thats where at least some of this storage growth is coming from. You have to set up storage networks your entire worldwide operations can access and not lock each other out, with much more redundancy than you needed in the past.
BTW I don't own vrts yet and I have a trivial amt of beas. I have all the brcd I want though. I was waiting for beas to come to me, and I just figured out I wanted vrts. Maybe we'll get a correction, I'm trying to be conservative here because I know things aren't 100% healthy yet- as you know I am in the "things are improving" camp... of course I've predicted 10 of the last 0 recoveries in tech too. <gg>
Lizzie |
