The irony is that they more money Ancor loses, the higher the market cap..here are some other things to think about:
- Wall St will value it on Fibre Channel technology play and takeover play, ie, a "Story Stock".
-The Ancor story has changed for 1998/99..The problem with 1996/97 is that the FC story failed to materialize ( FC lost LAN battle to Gigabit Ethernet and SAN did not exist )and Sequent cancelled contract with Ancor due to Interoperability problems tracing to HWP tachyon chip and Emulex adapter which did not do Class 1. The O Hara/Lewis revenue re-statement killed mgmt credibility.
-Fast forward to today..new mgmt, new products, SAN on the cusp of explosive growth ( eg. 3 Com endorsement ), class action lawsuit removed...Boeing, Netmarks, Inrange, Prisa/SGI...I would not be surprised to find that Reg D has only $1 million (+/-)left to convert by the end of this week...
- look at valuations of money losing Internet highflyers versus hardware/chip valuations
- the short term danger of making money is that you get into PE ratios, sequential/year over year growth estimates, etc..FC is still in very early stages of adoption which leads to lumpy/unpredictable revenue streams...professional analysts should recognize that Ancor is not an earnings story and quarterly revenues/earnings for the next 6 months will fluctuate..The visibility of Fibre Channel and the potential new OEM's will determine the stock price for Ancor for the next 6-9 months. It will be interesting to see how the market for FC switches splits up between Ancor, Brocade and McData( notwithstanding Brocade's current "84% market share")..Long term, with 3 Com and other networking companies to follow, I cannot see Ancor as a 1 product company while still remaining independent. They will either expand their product range or be bought out. A no brainer. |
