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

To: Cooters who wrote (9495)	11/13/2001 5:01:15 PM
From: techreports	Respond to of 10934

While we are not concerned about other NAS offerings per se, we view NetApp as a mid-range storage company (not just a NAS company). Therefore, as it enters the enterprise more aggressively to supplement deteriorating Internet and Telco spending, it is going to more squarely compete head-to-head with EMC, Hitachi and IBM. This could bring about greater pricing pressure for NetApp going forward, resulting in further margin erosion and pressure on the stock. Management agreed that margins were more likely to go moderately down than up in the near term. Management stated they would not lose business based on price. I'm no expert in storage but since NAS is significantly cheaper than the SAN offerings from IBM, EMC, and Hitachi...NetApp shouldn't be feeling any pricing pressure but rather the SAN vendors should, right? Also, many people talk about how EMC will face increasing competition, ect... In my view, EMC only has 2 competitors. IBM and Hitachi. They are the ones who develop the storage systems and then resell them to say HP or Compaq. Very different than the PC industry where anyone can offer the same product as the big boys (dell, gateway, compaq, ect..) Also, one would think that DAFS would give NetApp more of a lead in the NAS space which would help margins.. EMC's admission that there is a conflict of interest in pushing NAS hardware (as well as the admission they bundled SAN sales with NAS sales) could mean that NetApp's #1 competitor isn't really all they were cracked up to be. That's a pretty big positive don't ya think? I'm not saying NetApp is a buy at today's prices but this is clearly a glass half empty, glass half full type thing. Is SSB ignoring the fact that GM have held up amazingly well? What about revenues have stopped dropping? We expect NetApp stock will continue to be under pressure due to 1) its exposure to dot-com and telco spending; 2) its decelerating growth; 3) increased competition in the space; and 4) increased pricing and margin pressure. We believe the stock will continue to be under pressure until investors can see a solid quarter of increasing Filer unit shipments and domestic growth. 1) and NetApp's non-tech customers have grown like 500% 2) NetApp faced the same decelerating growth every other tech company faced, but business has now stabilized 3) competition from who? EMC threat seems overblown. Competition is a part of business and every storage vendor is facing competition 4) yet GM have gone up? Apparently investors liked the strength NTAP has shown is up more than 50% even with-out a solid quarter of increasing Filer unit shipments I think SSB wants to buy NTAP shares and is trying to push the stock lower.