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Strategies & Market Trends : Trade/Invest with Options Jerry a Point & Figure Chartist -- Ignore unavailable to you. Want to Upgrade?

To: kurt aichler who wrote (135)	1/23/2001 12:05:08 AM
From: Luce Wildebeest	Respond to of 5893

Well said Kurt. I second that emotion! niv

To: kurt aichler who wrote (135)	1/23/2001 12:05:35 AM
From: 2MAR$	Respond to of 5893

Data storage earnings seen justifying high valuations By Peter Henderson SAN FRANCISCO, Jan 22 (Reuters) - Data storage companies may be among the few bright spots in a glum earnings season for technology investors, proving that businesses still need a place to put all that data even when budgets are tight. "Storage demand remains solid and non-discretionary. Customers often don't have a choice and storage is taking functionality from servers," brokerage Merrill Lynch said in a recent report. While companies in other areas of information technology have been cut with corporate budgets in a slowing economy, the stocks of sophisticated data storage vendors have maintained high valuations and most analysts say their growth will prove strong enough to maintain and even jump start their stock prices going forward. EMC Corp. <EMC.N>, which builds storage area networks that separate data from the traditional network in order to free up resources, reports quarterly results on Tuesday. Few analysts expect to hear much from EMC about the effects of economic slowdown that even server giant Sun Microsystems <SUNW.O> cited in its earnings report last week. "We expect EMC to be upbeat on their call," Banc of America Securities analyst Shaw Wu wrote. "We believe our estimates are subject to upward revision." EMC is expected to report revenues rising to $2.56 billion from $2.25 billion a year ago, with earnings of 23 cents per share, up from 17 cents, First Call/Thomson Financial said. The first indication that the wind is still filling storage sails came last week from Emulex Corp. <EMLX.O>, which builds adapter cards that are used in storage area networks. Emulex second quarter revenues jumped 112 percent on the previous year to $71 million, beating the $65.73 million First Call consensus. "We experienced rising demand from substantially all of our key customers during the second quarter, illustrating widespread growth in networked storage solutions enabled by Fibre Channel," President and Chief Executive Paul Folino, said in a statement that raised company targets. Storage technology separates data from servers, the engines of corporate networks to offer wider access and more room for expansion. It also makes use of faster means of transferring data, especially the Fibre Channel protocol. Personal computer makers Dell <DELL.O> and Compaq Computer Corp. <CPQ.N> have sought to capture some of the explosive growth of storage by offering their own systems, which are less complex that the ones built by EMC. Storage area networks, or SANS, detach the data from the computer servers into separate networks, the preferred solution for big corporations, while Network Attached Storage, NAS, aims to store data in purpose-built machines that can be added quickly and relatively cheaply. Network Appliance has 40 percent of its sales tied to e-commerce, since dot-coms especially like the appliance model, said Wit SoundView analyst Glen Ingalls. "My take is that storage is probably less affected by fluctuations in demand than servers would be," especially for storage networks used by big corporations with more steady patterns of investment. Within the storage market, "A company like Network Appliance, might have more exposure (to dot-coms)," he said. Network Appliance revenues are seen rising to $292.73 million from $260.78 million the previous quarter and $151.30 million the year before. Encouraged by Emulex, Ingalls said other companies whose products are based on Fibre Channel storage networks also looked to do well. That includes Brocade Communications Systems Inc. <BRCD.O>, which makes Fibre Channel switches and is expected to report per share operating earnings of 12 cents, up from 3 cents a year ago on revenues rising to $162.21 million from $42.7 million a year earlier. Ingalls said storage makers were not immune from a downturn but pointed out that Brocade was trading at about 25 percent below its 52-week high, which means that it has outperformed the industry as a whole. The American Stock Exchange computer hardware index <.HWI> has lost about half since its high set. "Investors are going to stick with companies that have the best possible outlook, the best fundamentals, best execution, best chance of raising numbers going forward. They will be the first companies that investors come back to, and the companies that run the furthest in another upleg," he said. ((Peter Henderson, San Francisco Bureau 415 677-2578 peter.henderson@reuters.com))