If NTAP is indeed able to grow revenues at 80+% per year, and to maintain the present profit margin, eventually they must beat analysts' expectations, which are for approximately 45% eps annual growth rate. (The only way around this logic is for NTAP to increase the number of shares rapidly, as they might through acquisitions.)
Geoffrey Moore, in his book "Inside the Tornado," states that one of the greatest dangers for a company in a rapidly growing market is to fail to grow faster than its market. It seems to me that NTAP is indeed inside the tornado. Now is the time for hypergrowth! I hope Netapp is able to grow sufficiently fast that they emerge as the gorilla of fileservers. Otherwise, they will eventually be just another chimp, to use Moore's lexicon.
A goal of 80+% growth (revenues and earnings) is now more appropriate for NTAP than 45% - so I hope that we start to see some quarters in which earnings beat expectations.
Most investors, it is true, do not understand what NTAP does. That's OK with me. Eventually I expect growth to tell the story. I kind of like the low-key, low-hype approach. Let results do the talking. |
