I'd like to think, reading the press release, that the layoffs are primarily related to the dropping of manufacturing.
EMLX has been forced to shift gears big time to get into FC. Unfortunetly for them, Once they became a company with real revenues and earnings, they started getting judged on those fundamentals.
I see it as a speculative FC play, with the printer card buisness being the gravy. By way of comparison, the 39% institutional ownership might see them as a fundamentals driven company with the FC part being a risky unknown.
As far as ANCR vs EMLX goes, I hate to go there but I will at the risk of attracting detractors.
I know nothing about EMLX's management except that they were reasonably successful in the past, and I agreed with their current move. Ancor's management has improved markedly. Long story and about 500 posts describe the contrast. Ancor basically invented FC which is all well and good but they were not particularly good buisnessmen. The CEO was a good talker and did what the shareholders wanted. Press releases were put out any time the stock price waned and investors were kept abreast of progress. This team is much more professional. You can get their opinion and they are happy to talk to you, but they keep secrets where appropriate and they don't announce deals until they are signed sealed delivered and working. Announcing the Sun decision was a classy decision.
As far as products go, I believe that switches are going to become neccesary as hubs have serious limitations. The so called switches that Vixel, Arxcel, and Gadzooxs have are technically very limited. Brocade and Ancor have best switches and they are not easy to engineer.
If you buy into the figures that are being tossed around for the FC switch market in the year 2000 and beyond you will see that if things unfold properly Ancor and Brocade could be another ASND, CSCO or whatever. FC is going to replace SCSI, there is no doubt at this point. Once it has a stronghold in the SAN arena, it will start to suplant Ethernet in the LAN as well. Bridges are also being built between ATM and FC. The switch market will be billions, maybe 10s of billions. Processors are getting faster in a hurry and storage is the big bottle neck right now.
The OEM switch revenues for Sequent are 20M a year. Sun has been estimated at 30M/year. In the near future (certainly this year) IBM, DEC/CPQ and HWP will be announcing plans in the storage arena. Each of their contracts will be worth at least what Sun and Sequent are worth. Additionally, there are a couple dozen tier II type OEM opportunities that will have 7 figure annual switch revenues (at least). Also, there are a bunch of LAN opportunities and military possibilities.
Brocade beat Ancor to the punch by a few months with the Silkworm. In my opinion, Ancor has a better switch. Ancor management is confident that they will win there share of the buisness and they have the product to back that up. Once they have the press releases backing that up it will be a much more expensive stock. Right now I am merely speculating but I don't want to have my face pressed against the window looking in when it does happen.
As far as EMLX goes, they have not been scrutinized by 10,000 frazzled investors like Ancor has and subsequently I do not know nearly as much about them. I do know that press releases, until the last one, have had virtually no affect on the share price. They announced about 4 printer contracts one month and the stock just sat there. I am convinced the market knew this announcement was coming and that is why it dropped to the $10-$12 range. I think it will easily recover from the action the past couple days and at a minimum return to the $10-$15 trading range.
I rambled, sorry.
Steve |
