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Technology Stocks : Son of SAN - Storage Networking Technologies -- Ignore unavailable to you. Want to Upgrade?

To: pprobinson who wrote (3732)	8/1/2001 5:44:18 PM
From: Gus	Read Replies (2) \| Respond to of 4808

Compaq captured 48.5% of the SAN market in 2000 *based on units sold* but it STILL lost market share *based on SAN revenues* primarily because it was almost exclusively selling small, homogeneous SANs while shouting itself hoarse about open systems. By contrast, EMC boosted its market share based on SAN revenues from 20% in 1999 to 30% in 2000 despite falling behind Compaq and Sun in SAN market share based on units sold because it was selling large, heteregeneous SANs. Ain't what they say but what they do is what I say. According to Gartner, Compaq deployed more than 24,000 SANs and accounted for 26% of 633,000 switching ports sold in 2000. 633,000x0.26=164,580 so 164,580 ports/24,000 SANs result in an average Compaq SAN with 6.86 ports. This matches Compaq's disclosure earlier this year that they were deploying SANs with a 4-switch limit in 2000 and that they intend to increase that limit to 20 switches in 2001. I think, however, that Compaq is going to have a harder time selling larger, heteregeneous SANs because Compaq itself has limited experience supporting the servers/storage systems of its rivals. Moreover, 70% of Compaq SANs are deployed by resellers who are compensated on the basis of their ability to move Compaq merchandise. What I think Compaq is trying to do by supporting McData's directors -- which are generally found in core SANs supporting high-end servers, storage systems and mission-critical applications -- is to improve its ability to capture the departmental and workgroup SANs, but that's a very difficult strategy to execute because the vendor that controls the core SAN has a very good chance at controlling the edge SAN market too. Note the increased number of field reports of very aggressive pricing by EMC that makes absolute sense when one considers the importance of controlling the core SANs as a way to boost future growth not only at the core but at the edge as well. Anyway, here's Brocade's latest revenue guidance: ...Jennifer Hart, a Brocade spokeswoman, said the company previously gave guidance on its second quarter conference call of year-over-year revenue growth of 58% - putting fiscal 2001 revenue at about $519.9 million, compared with year-ago revenue of $329 million.....Brocade also expects revenue and earnings growth to resume in the fall... quicken.com BROCADE's latest GUIDANCE Period Sales Y/Y % 1HFy2001 $280M 159% 2HFy2001 $240M 7% Guidance $520M 58% Current guidance is for a flattish 3Q2001, or around $115M, which means that 4Q2001 will come in around $125M. $115M in 3Q2001 means 25% Y/Y growth. $125M in 4Q2001 means -5% Y/Y growth! Easy comps are ending for Brocade at the cusp of a major technology transition to a new ASIC and a new switch platform. Consider, for example, that Revenue has to grow 32% sequentially from 4Q01 to 1Q02 in order for Brocade to post 0% Y/Y growth in 1Q2002!!!!