Roger,
I think the loss of IBM is probably factored into the current price. If we get some confirmation about Sun, or especially if Ancor loses HP, I don't know where the floor would be. I have always thought that IBM would be the biggest prize, due to their name recognition, but I have also thought that Ancor had their best chance with HP. With Sun at least delayed, if not lost, and the storage division at IBM probably lost, Ancor absolutely can't afford to lose HP.
I'm looking at it this way. Before we heard anything from Sun, IBM, and HP, Ancor could legitimately go to potential investors and say that they had a reasonable, maybe even a good chance at all three. If these rumors are true, I don't see how they can do that anymore.
As Roy has stated, there just aren't that many top-tier OEMs out there, and it would appear as if Brocade has at least two, and depending on the accuracy of these rumors, possibly three or four. That doesn't leave much left for Ancor. With revenues now getting pushed out to 1999, I think the chances of Ancor needing another round of financing are high, but I'm not so sure that financing will be as easy to get this time around, especially without a major OEM. The last thing I want is another round of dilution, but that's the way it looks to me right now.
I think the Q2 results will be a pretty good indication of whether I'm right or not. If there was substantial revenue for the quarter, apart from the $1 Million already booked in April, that would indicate that the incremental orders are starting to pick up. I don't expect that, due to the lack of substantive announcements, though.
In my opinion, what we are seeing here is the bandwagon effect. Because of Brocade's early success, they will win some additional business by default. Companies may not be willing to take a chance on Ancor, even if their technology is better. It's the old "Nobody got fired for buying IBM" logic, except that this time it is Brocade. It is a much safer play to go with Brocade, because they have more real-world experience with SHIPPING products (mostly Sequent). Ancor's experience with Hucom is valuable, but I don't think there is any doubt that the high-performance LAN area is a shrinking (or at least static) market, due to Gigabit Ethernet. Simply put, Brocade has more experience in the SAN area, has better industry connections, and their geographical proximity to the major players has helped them tremendously. What many of us perceive as Ancor's technological superiority has apparently not helped them overcome these Brocade advantages.
Craig |
