To: Stoctrash who wrote (2387 ) 2/1/2001 1:49:59 PM From: John Pitera Read Replies (2) | Respond to Fred, I think I'm in your camp.... PE's are coming down..... seems like a metaphysical certitude it's the first Hold. You don't see many Holds on high growth storage stocks. Once one analyst has a Hold, it makes it easier for the others to downgrade. CSFB is concerned about softening demand in several key end markets and its high valuation. Specifically, they believe NTAP’s positioning in the storage market may be undermined by competitors’ initiatives to unify SAN and NAS architectures. Industry checks indicate that EMC’s (EMC 75.99)recent push into the NAS market with a unique architectural approach and aggressive pricing could hamper NTAP’s ability to sustain top-line growth. Briefing.com's take on storage is that in the not too distant future SAN and NAS will blur into one so that part is not surprising. (see recent Stock Brief describing SAN and NAS) Also, in a recent conference call, EMC was bold enough to say they would be the number one NAS player by the end of 2001. Apparently, they were not kidding and are not afraid to engage in a price war with NTAP to do it. Another concern is the severe warning out of CacheFlow (CFLO 18) this morning. While caching represents only 10% of NTAP revenue, the fact that CFLO expects only half the consensus revenue is a concern. Recent story stocks have warned of NTAP's valuation, but now we are concerned about the short term. Do not hold NTAP going into its earnings announcement on February 8. We may turn out to be completely wrong, but the upside is limited and would likely be short-lived anyway while the downside is considerable. If the company lowers guidance, the shares could easily be in the 30's.
