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To: zx who wrote (1838)	2/19/2000 5:58:00 PM
From: zx	Read Replies (1) \| Respond to of 2341

ditc in this weeks barrons. Q: Your funds had spectacular performance last year. Are you worried that we're in a mania and that a horrible shakeout lies ahead? A: That's the ultimate question. The market is so stretched when you take into account the performance of the technology and health-care stocks we favor. And yet the rest of the market is not really doing that well. I think 2000 is going to be a rough year, a difficult year, a tricky year. But I don't think it's going to be a down year, except maybe for the Dow and the S&P. We think we can still find plenty of winners among the small-caps and produce positive returns. They are still trailing the S&P on a relative basis even after the tremendous surge in the small-cap market since October 1998. These types of moves tend to last a couple of years, so we are clearly late in the move. We have reduced our technology exposure from over 70% to around 50%. Q: Given your caution, what do you like these days? A: One company we like a lot is Ditech Communications. They make echo-cancellation equipment. These are devices that suppress the sound delays in long-distance phone calls that people find so aggravating. And with more and more use of wireless communications, there's more and more demand for echo-cancellation equipment. This market was historically a half-billion dollars a year, but it's starting to grow at better than 20% a year. Ditech competes against Tellabs, but has a superior product and is taking share away by winning a substantial chunk of new business. The company also had a huge earnings surprise in its latest quarter, ended October 31, reporting 53 cents, versus what had been a consensus forecast of 30 cents a share prior to a November pre-announcement. Q: Trading around 182, the stock isn't exactly cheap, is it? A: Maybe not. But this company could earn as much as $2.50 during the fiscal year ending April 30, 2001, and, maybe $3.50-$4 in the following fiscal year. Last week, it beat the consensus, earning 41 cents on a post-split share in its third quarter. That would bring its earnings multiple to 50 or under, which is cheap in my universe of stocks. Look, this is a company that could compound its earnings growth at around 40% over the next three years.

To: zx who wrote (1838)	2/19/2000 10:54:00 PM
From: zx	Respond to of 2341

(?gorilla)copied.NTAP is dominating their space in a very meaningful way. The results speak for themselves (two quarters now of sequential revenue growth in the low 20s), but listening to the details in the call helps you understand how NTAP is delivering these results and will continue to deliver. First, thoughts on competition. NTAP's e-commerce business, which includes not just dot-coms but traditional companies setting up an e-commerce operation, has grown to 40% from 30% last quarter. NTAP has become "the company" to consult for storage solutions in e-commerce. E-commerce operations are thinly staffed and require speed of implementation. NTAP's NAS solution provides both simplicity of deployment and simplicity of operation, both major selling points in the e-commerce arena. Add to that the lower cost of equipment AND of ongoing operation, and, to quote the management, companies almost "have to" deploy NTAP's system. It is important to note that NTAP is winning against competition from all vendors. I think the reason we are hearing so much from EMC, IBM, etc. on NAS is that they are going up against NTAP and getting their butts kicked. EMC cannot beat NTAP on new accounts. Even within their base, Celerra is not winning a lot of volume. When you are competing for an account in the internet space, politics play a negligible role in the decision compared to enterprise systems. There is usually no entrenched storage company. NTAP lets these customers test the system and EMC and others are making no inroads. In the enterprise space, it is more difficult, because competitors like EMC are always well-entrenched. But unlike EMC not making inroads in the e-commerce space, NTAP is making inroads in enterprise storage systems. They cited BMW, GM, Enron and others as very big enteprise system wins for them, won in competition against all major vendors. They are putting emphasis on auto and energy sectors to leverage on these wins. In addition, many traditional companies are setting up an e-commerce presence and NTAP is displacing the entrenched competitor in this area. Same way, these companies need to deploy quickly and efficiently. Politics are subsumed. NTAP has its foot in the door. Very powerful. Recruiting talented sales personnel "has never been easier." NTAP are hiring from EMC, Hitachi, Sun and other major storage companies. These salespeople get deployed at full effectiveness immediately, which is allowing NTAP to cover the landscape much better than they have in the past. On SAN versus NAS. NTAP continues to think SAN's application in the future will be as backup storage. They continue to think winners in storage will be determined by having an easy and cheap way to plug into the network, particularly in e-business. Most e-business operations do not have the vast IT staffs, and thus place a premium on simplicity of deployment. On customers. NTAP added 320, versus 270 last quarter, accelerating growth rate like all the other numbers. Importantly also, they are entering more deeply into existing customers and expect to continue to do so, with filers AND caching equipment (Netcache also growing at an accelerating pace). One analyst marvelled at NTAP growing faster as they get bigger. This did not come as a surprise to me and I doubt it would come as a surprise to many here. It's called a market in hypergrowth stage and a company executing to perfection. Some analysts will get worked up about the comment from the CEO that in the long run they won't be able to grow faster than the overall market, now estimated at 60% by 2 unnamed research organizations. Why get worked up? This is just an obvious statement. I would make two observations here. First, NAS growth is being underestimated. This is truly a paradigm shift in storage systems and I believe most marginal storage system deployments will be NAS, particularly since the real growth is coming from e-commerce where NTAP is kicking butt. Second, NTAP's product and quality of execution will cause them to continue to tower above the rest. I think growth will continue to be excellent. Storage growth=large NAS growth=larger NTAP product and execution=the best ====>Stock price=takes care of itself