Patrick and Fellow Ancorites:
Yes there was a shareholders' meeting today from about 3:30PM to 5:00PM - I just got back. I met 3 fellow SI members there (not nearly as many as last year). Ken H. gave the business meeting and general presentation of Ancor's more focused LAN and SAN strategy. I also had the opportunity to talk with one of their engineers after the meeting. I will give you a few highlights now and see if I can recall more later:
1. Ken H.'s message was the same as we have heard in the past - with some slight modifications. SAN OEM revenues are not expected until 1999 - with announcements in the third or fourth quarter. He feels the stock price is low relative to the potential market, but understands that it is viewed as a "story stock" that will not move unless there is news. He said he viewed one aspect of his job as making sure everyone gets the news at the same time. He did not speculate on sales or potential OEMs, except to say that IBM is certainly a consideration. The lost Sun deal was viewed a not on technical merit and he reviewed the complexity of this decision. Interestingly, it was similar to some of the debates we have had on the thread - these deals are not based solely on technical merit, especially if the switches are needed for an application where their performance is similar. I did get him to give me his "unbiased" opinion that the MKII is a superior switch design. He believes Ancor's ASIC team is "second to none" and he qualified this by saying he has extensive experience in the industry with ASIC teams. He also said they are loyal and that when California calls - they hang up. The failed Sun deal caused them to re-evaluate not the technology, but the way they market to OEMs - and he thinks that has improved.
Ken H. makes no bones about the fact that he was interested in Ancor because of the opportunity for substantial growth and he thought he could use the team to "make a lot of money for our shareholders."
2. They have enough cash to make it through the end of the year - "and then some." There are no forseeable unexpected charges at this point.
3. MKII revenues are negligible at this point, but there are no significant SAN revenues. The current revenues are on the LAN side running class 1(third generation switches). SAN applications are class 3. Class 3 is suboptimal for tape storage devices (but possible). Ken H. thought there might be a migration up classes in the future.
4. I asked whether switched HIPPI or GE was a threat in the SAN. The answer was: "The market has spoken and it is FC in the SAN". Technical reasons given were - processor load with GE and problems with ethernet protocol that are unacceptable for storage.
5. Ancor switches now backup one of the largest cluster of NT servers in the country at the University of Illinois.
6. From an engineering perspective - Ancor's approach seems much more focused on their LAN/SAN strategy. I asked about WDM to FC and was told that in the old days they may have been looking at that. There were many special projects that were unfocused. The current strategy is to develop both hardware and software that meet customer demands for numerous interfaces. The hardware and software effort is squarely focused in that direction. The opinion I got was that Ancor has advanced software - that they had "zoning" some time ago, but that they would advertise it only after they were convinced it was what all of the customers needed to run a LAN.
7. From a marketing perspective - it is also focused on OEMs. They did not necessarily see geography as a problem. The new VP of sales pointed out that his company was Cisco's vendor of the year despite the fact many other companies were in Cisco's back yard.
8. They have a new brochure - entitled The Future of High Performance Interconnects, very professionally done, good quotes, and good definitions of why they claim world records for data speed since 1992.
9. Ken H. declined to comment on new products.
10. Ancor continues to employ 70+ people with little attrition.
Will try to think of more stuff later - Greg, Ron, Pat - help me out or make corrections.
George D. |
