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

To: Bruce Brown who wrote (4333)	1/23/2002 7:44:18 PM
From: Gus	Read Replies (1) \| Respond to of 4808

Another high-end vendor that posted good sequential growth is the perennial industry value enigma, STK, which recently signed a partnership with LSI to resell its mid-range storage products, which also happen to be the same mid-range storage products rebadged by IBM to take the place of the Compaq mid-range products that it discontinued. Tape is also one of the areas where IBM managed to shift a 60/30 STK/IBM duopoly into a 40+/40+ STK/IBM duopoly in the last few years. Here's STK vs EMC over the years. Implicit in STK's lackluster growth are the inherent difficulties of blasting through the $1B and $2B milestones in enterprise storage, which is clearly shaping up to be one of the most brutal markets in technology. Consider that only IBM and EMC have managed to blast throught the $3B milestone convincingly over the last 30 years. STK EMC EMC+DG* 1990 $1.6B $190M $ 190M 1991 1.6B 260M 260M 1992 1.6B 386M 386M 1993 1.4B 782M 782M 1994 1.9B 1.4B 1.4B 1995 1.9B 1.9B 1.9B 1996 2.0B 2.3B 3.6B 1997 2.1B 2.9B 4.5B 1998 2.3B 4.0B 6.4B 1999 2.4B - 6.7B 2000 2.1B - 8.9B 2001 2.0B - - *DG acquisition closed in 4Q1999. STK's revenue mix is around 70/30 Hardware/Services. Here's a closer look at STK's hardware revenue mix and the erratic growth patterns which explain why STK continues to have a hard time sustaining growth multiples. Disk-related revenues probably peaked a few years ago at around $400M to $500M a year when IBM was reselling Iceberg. From a cursory look at these erratic results, one could easily surmise that the STK sales force goes skiing every other quarter.<g> STK Hardware Mix 1Q2000 to 4Q2001 Tape Q2Q Disk Q2Q Network Q2Q 1Q2000 $ 234M - $ 32M - $ 36M - 2Q2000 279M 19% 40M 27% 30M -16% 3Q2000 249M -11% 32M -20% 44M 47% 4Q2000 348M 40% 41M 27% 48M 8% 1Q2001 247M -29% 26M -36% 32M -33% 2Q2001 286M 16% 25M - 3% 35M 10% 3Q2001 258M -10% 24M - 7% 41M 17% 4Q2001 308M 19% 40M 70% 37M -12% At this rate, Seagate's Xiotech unit could easily surpass STK's disk revenues in a few quarters. IDC recently announced that Minnesotta-based Xiotech was the fastest growing RAID vendor in 2001.