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Technology Stocks : Network Appliance -- Ignore unavailable to you. Want to Upgrade?

To: gingersreisse who wrote (5112)	11/17/2000 4:04:01 PM
From: DownSouth	Respond to of 10934

Thanks, Ginge. Here is one from the Boston Globe: BOSTON CAPITAL EMC, rival draw their battle lines By Steven Syre and Charles Stein, Globe Staff, 11/17/2000 They have never been very flattering toward each other in public, giant computer storage leader EMC Corp. of Hopkinton and Network Appliance Inc., an upstart competitor that wants to turn the business on its ear. EMC, the trusted choice among big corporate customers for its pricey but ultrareliable equipment, has been working down from the expensive end of the storage market to grab more of the midprice level. Network Appliance, a California company that won impressive victories in the low end of the market with inexpensive networked storage products, has been moving up the ladder toward the same middle ground. Now EMC and Network Appliance are about to run head-on into each other, and sparks are already flying. A brand new EMC product, code-named Chameleon, will roll out soon - possibly within weeks - and it is aimed directly at Network Appliance. By the common measures of sales and stock market value, Network Appliance is small potatoes compared with EMC. Other competitors in the computer storage market are bigger. But the company has blazed a commanding lead in the relatively new arena of ''network-attached storage,'' which connects small and inexpensive pieces of hardware throughout a shared network. Network-attached storage accounts for about $2 billion of the overall $44 billion market for computer storage but it is forecast to grow rapidly. EMC describes network-attached storage as a small but attractive market in which it competes aggressively (it accounts for $133 million of EMC's $2.3 billion total sales in the most recent quarter). Network Appliance executives suggest their simple and inexpensive products are starting a storage revolution that ultimately will erode demand for EMC's big and expensive Symmetrix line. An important question: Will EMC's new, less expensive Chameleon eventually cut into its own higher-end business? ''I walk in and I've got a very disruptive business model and disruptive technology,'' said Mark Santora, senior vice president of marketing at Network Appliance. ''If this [EMC Chameleon] product is truely competitive with ours, that means it's going to be truely competitive with Symmetrix.'' EMC executives insist that's all wrong. They say they win the big accounts with sophisticated software, an army of 10,000 sales and support staffers, and the best reliability in the business. ''They [Network Appliance] are a niche player that understands a limited number of application and customer types,'' said EMC spokesman Mark Fredrickson. Network Appliance has become a Wall Street darling thanks to its huge growth in sales, which now run at $260 million per quarter. The company's stock, which went public in 1995 at a split-adjusted 84 cents per share, reached a peak of $148.625 late last month. But Network Appliance stock has been cut in half since Oct. 20. A large part of that decline can be blamed on the recently bearish technology stock market, but analysts are cautioning investors to keep an eye on the competitive impact of EMC's anticipated new storage system. A small number of Chameleon units are said to have shipped in recent weeks and, according to at least one analyst, EMC sales representatives who have been unable to match Network Appliance products on price are telling the world their irksome competitor is about to become ''roadkill.'' ''We'll have to fight in the street,'' answered Thomas Mendoza, the Network Appliance president, in a conference call with analysts this week. ''I'm tired of shadow boxing. It's much easier when they actually have to produce. ... I'm really kind of anxious to get at it,'' Mendoza said. EMC officials refuse to discuss any details about their new product, or even directly confirm that it exists. But Chameleon is believed to be a storage product that blends Clariion hardware, acquired when EMC bought Data General Corp. last year, with software from CrosStor Software Inc. of South Plainfield, N.J. EMC purchased CrosStor earlier this month for $300 million. But EMC officials said yesterday they have been working quietly for more than a year with CrosStor, which produces operating systems that other storage hardware manufacturers incorporate into their products. Mendoza didn't sound impressed by a product that combines Data General hardware and CrosStor software. ''If they didn't put their [EMC] name on it, you would never dream of calling and saying, how are you going to compete with that combo?'' Even EMC officials who are mum on Chameleon won't let that slide. ''EMC is an innovator, not a repackager,'' said Fredrickson. ''If they are expecting us to bring cobbled-together existing technology to market by slapping an EMC label on it, they are even less prepared for this battle than we would expect them to be.'' Steven Syre (617-929-2918) and Charles Stein (617-929-2922) can also be reached by e-mail at boscap@globe.com This story ran on page D01 of the Boston Globe on 11/17/2000. © Copyright 2000 Globe Newspaper Company.

To: gingersreisse who wrote (5112)	11/17/2000 4:05:38 PM
From: DownSouth	Respond to of 10934

I liked this part: "Yet we believe that, at $73 a share, this is a good time to buy Network Appliance. At this level, Network Appliance's trailing price-to-sales ratio is 32, only 19 percent higher than EMC's price-to-sales ratio of 26, even though Network Appliance's revenues are growing twice as fast. The truth is that long-term investors should remain unfazed by recent price swings, as strong growth rates combined with expanding Internet usage will continue to bolster the sector. "