<<With all the hoping and speculating that goes on around here, it's
sometimes easy to lose track of what we do "know". >>
1. FACT: Fibre Channel is an emerging technology that is picking up momentum, despite experiencing the growing pains of product delays, parts shortages and interoperability issues that are now being solved. Industry analysts forecast a multi-billion dollar FC market by Yr 2000. More companies moving into Fibre Channel ( eg Seagate, Sun, HP, Compaq, Q Logic, Emulex, Adaptec, SGI, etc..) and FC start-ups ( Brocade, Gadzoox, Arcxel, etc..) well-funded by VC's also confirm FC growing momentum. A Seagate source predicts 30% of all drives will be FC by the Year 2000 ( I assume the rest is SCSI ).Wired Magazine pans Fibre Channel as an overhyped buzzword. We've arrived!
2. FACT: There are at least 6-12 significant OEM opportunities that Ancor is in various stages of development, discussion, testbeds, negotiations, etc..Company officials do not deny this, but obviously will not comment on the names, timeframe or the probability of success. ( My own definition of significant is at least $5-10 million in annual revenues...Sun would fall into the category of a VERY large OEM, ie larger than Sequent contract )
3. FACT: Ancor has a new/improved Managment team, an improved/more active Board representation and a new, more focused Storage OEM FOCUS. Cal Nelson, Ken Hendrickson and Carla Kennedy are "A" players with proven track records and industry contacts, especially for a small company the size of Ancor. Storage is where the bulk of the FC opportunity is today fuelled by the trend towards "distributed/clustered computing" and the evolution of the SAN. Ancor Employee morale is extremely high and unplanned turnover is virtually non-existent. The only negative I've heard is the lack of enough stock options for most employees. I am happy to hear this because this means that insiders are bullish on the Company prospects and its stock price.
4. FACT:There are also very significant opportunities/applications for FC switches in High Performance Networking environments. This would include the vertical markets of the Oil Patch, CAD/CAM, Financial Services and Military/Aerospace. Ancor is making EXCELLENT progress in these areas which should become more readily apparent in the coming months, ie late 97, first 6 months 1998. Many/most of these applications specify and demand Class 1 in their RFP's. Dennis Taludo of EDS is an unabashed proponent of Class 1 switching. I read his e-mail to the FC standards committee myself as have others on this thread. These so-called niche market contracts/ potential contracts range in value from as low as $200,000 to upwards of $10-20 million.
5. FACT: Ancor just introduced the lowest price, highest performance FC switch in the Industry geared to ALL 3 Classes ( Class 2/3 especially for storage OEM's ), up to 8 ports arbitrated loop functionality and THE lowest latency numbers, bar none. The numbers are real and they can be proven with a scope if necessary. Latency is VERY relevent/important, especially when scaling multiple switches. 4 ports per ASIC which gives Ancor a tremendous cost advantage if needed to outbid a competitor on price.
6.FACT: Ancor is on track for a RECORD quarter ( Q3 ) in terms of revenues and Management has already told Kinnard that they will likely beat Kinnard's previous estimate of $3.5 million for Q3.
7. FACT: Brocade will NOT win all the OEM contracts and neither will Ancor.
SPECULATION:
SPECULATION #1: The new/improved Ancor managment team will provide the leadership, the strategy , the resources and the proper execution to leverage their proven and new technology ( eg.new Gigworks MKII switch ) to deliver at least a doubling of revenues in 1997 and successfully close at least 3-4 of the 6-12 OEM opportunities which will ramp in 1998.
SPECULATION #2. Within the next 1-6 months, Ancor closes several of the large prospects in the military/aerospace, financial services, CAD/CAM and oil patch markets. All things "digital" will also realize the benefits of Fibre Channel, ie:broadcast/movies/printing/photography.
SPECULATION #3. Ancor announces these contracts over the course of the next 30-180 days.
SPECULATION #4. Ancor stock price moves up commensurate with exponential ramp in revenues and contract announcements. Depending upon who they close and when, 1998 revenues could be as low as $25 million and as high as $75-100 million. Apply a PSR of anywhere between 6 to 10 and do your own math to determine "speculative/potential" market valuation over the next 3-12 months.
SPECULATION #5. As contracts are signed for significant increases in revenues, the Company will eventually have to obtain working capital via additional equity and/or debt. The combination of significant impovements in revenues/capital will result in full NASDAQ listing, Wall St analyst coverage and increased Institutional ownership.
SPECULATION #6. Long suffering ANCR LONGS like Craig Stevenson and Iceberg reap the rewards and retire from Silicon Investor and Motley Fool. |
