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Technology Stocks : Network Appliance

NTAP 117.26

+1.1%

Dec 5 9:30 AM EST

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To: DownSouth who wrote (412)	11/10/1998 10:15:00 AM
From: Arby	Read Replies (1) of 10934

Thanks DownSouth! >I do not know what portion of INKT's revenues are from >caching software. They get a huge portion of their revenues >from portal services. Again, remember that the product that NTAP >is making its big bucks on is its filer. Netcache is a growing >revenue stream I guess by "portal services" you mean the search technology license deals they have with Hot Bot, Disney, etc. According to the Alex Brown Conf last month, 50% of Intomi's sales come from these deals and rev is growing 50%/yr. The shopping service is just getting started so rev is nil. That leaves something approaching 50% of rev for their network caching business which they also claim is growing 50%/yr. Most of this business is in the US were they claim a 6-9 month payoff on a $30k sw license + 25% service contract. (I am guessing that they are not including server costs in that 6-9 month ROI). From the same conference, Dan Wermenhaven claimed caching revenue was about 10% of NTAP's revenue. He also cited market research that claimed better than 100% CAGR. He also discounted those numbers somewhat. Most of his caching revenue is international where payback to an ISP is 3-4 months. He said that US sales were "perf based" because payback here is 14 months! It was these comments that led me to think NTAP could have a significant upgrade/replacement business in the US if their boxes are indeed better, faster and (at least, operationally) cheaper. This, in the same way that Cisco and Wellfleet replaced the early SW router functions running on NetWare and Sun servers. Good Investing, RB

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