To All: Recent brokerage recommendation.
SMITH BARNEY INC.
BARRY F. BOSAK
STDM: Trends okay
08/08/97 Storage Dimensions (STDM $6.00,1-S,Tgt $11.00) BARRY F. BOSAK
--SUMMARY:- -------- -------- ---------
Checks with STDM indicate that July business continued along the trend lines indicated in the 2Q97 conference call. A mid-life kicker to the SuperFlex 3000 provides product advantages over CPQ, HP, IBM. The new entry-level Raid-Pro is faring well here and in Europe.
Inventories continue to drop. Any excess 9GB drives could be at a minimum level at the end of 3Q based on recent activity. This dovetails with what we are hearing from other storage sources.
A management change in the midwest region could boost that territory--with more emphasis on higher level sales. Stock has been dormant as expected until there is a clear signal on turn-around. We like current news so far.
08/08/97 Storage Dimensions (STDM $6.00,1-S,Tgt $11.00) BARRY F. BOSAK --EARNINGS: ---------------- --------
FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year
Actual 12/96 EPS $0.02A $0.05A $0.10A $0.04A $0.21A
Previous12/97 EPS $0.13A $(0.17)A$0.08E $0.19E $0.23E
Current 12/97 EPS $0.13A $(0.17)A$0.08E $0.19E $0.23E
--OPINION: --- ------------------------ -------- --------
Storage Dimensions has upgraded its biggest product--the SuperFlex 3000--by adding a "repeater" that will take advantage of faster disk drive transfer rates. As the company moved from fast SCSI to ultra SCSI drives it noticed a deterioration in the linearity of performance. Hence it implemented a repeater in the I/O (input/output) to strengthen the signal and to synchronize the data bits. This gives STDM a performance advantage of captive suppliers--CPQ, HP, and IBM. We stress that a company specializing in storage will try such moves whereas captive suppliers are focused on other things.
The new RaidPro entry level disk array is doing well domestically and in Europe--and Europe is mostly a distribution market for STDM. While RaidPro just uses 4GB drives, new low profile 9GB drives coming out shortly (we believe that there will be a number of vendors, not just WDC) will fit in the RaidPro. With 6 bays, that would increase the capacity from 24GB to 54GB--a significant jump for a sub $10,000 device.
We are still using a visible profit in 3Q--pointing out that a one-quarter turnaround is unique. If it occurs (and we have to continue monitoring progress), this will be an accomplishment, in our opinion. It sounds like one smaller sales territory--Europe--is back on track and doing better. * Smith Barney usually maintains a market in the securities of this company.
Karl |
