> Is there anyone out there who can explain
> (in fundamental terms) why they think that that NTAP is
> still a buy at these prices?
Think about where the Web is going. In my mind, it's moving toward the TV model rather than the Usenet model: that is, most users being receivers of large amounts of information from a handful of providers. This is in fact true for all the individual success stories of the Web: Amazon, Yahoo, Remarq, and of course the huge web porn industry. All rely on warehousing tons of data they feed downstream to users who for the most part receive this data. (It's a bit different for transaction warehousing of the sort Amazon does, but still basically the same story)
Now think about the sorts of assumptions about the growth of the web made by the market, particularly in valuations of companies like Amazon and Yahoo. These assumptions are something like Web traffic will soon be 50x what it is now. As a corollary, buyers of Web stocks assume that revenues of their companies will rise similarly (or if not more), proportionately to Web traffic.
I can't vouch for the profitability of places like Amazon -- I love shopping there, but I don't know if they'll ever make any profits. I can't even vouch for the 50x assumption. But let's cut that sucker in 10 and assume it's only 5x growth. And let's recall that we are definitely moving toward a downstream-upstream dichotomous model rather than a peer-to-peer model of how information moves. Multiply NTAP's profits by at least 5, but maybe 10 considering the previous sentence. Do the same to NTAP's earnings numbers. There are conservative assumptions, you understand.
Does that make sense? I think NTAP is now where CSCO was 10 years ago. You must realize that all these stocks that made ordinary people millions of dollars over the years -- INTC, MSFT, CSCO, DELL, etc -- were never penny stocks, in fact always looked overvalued by any measure! I confess that I considered buying CSCO about 6 yrs ago and reached the conclusion that it was much much too expensive. I'd be in a significantly better financial position now had I bought instead of holding off. And so we learn from our mistakes.
Any other opinions? Let's get a discussion going. |
