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

To: stockman_scott who wrote (10359)	12/30/2002 7:09:10 PM
From: DownSouth	Read Replies (1) \| Respond to of 10934

Already, the increased competition may be hurting the company's gross margin for hardware. Its total gross margin remained at 62% in the quarter ended October 2002. But backing out revenues from consulting services and software sales, and assuming that Network Appliance gets a 90% margin on software, the gross margin on its hardware sales appears to have slipped from about 61% in the April 2002 quarter to 56% in October. No doubt that the competitive landscape is getting more complicated for NTAP. Dell and EMC are teaming up to fend NTAP off from below and above the storage scale. EMC is, however, still trying to front-end its Symetrix SAN architecture with Clariion NAS headends. The price/performance is still not there. Dell is branding EMC products as their own. Their sales force is still not able to explain what these things are and why they are better, and channel conflicts between Dell and EMC distributors are causing some problems. Dell, is however, a big sales force with lots of customers. EMC is the poster child for "the innovator's dilemma". They are focused on getting expansion orders from their installed base, fending off their competitors with price cuts and whatever other means is at their disposal. They face channel conflicts that are difficult to resolve without damage. The MSFT threat is not much, imo, as it has none of the advantages of NTAP's appliances. Sure, they will claim market share, but it will be at the low end for a long while. I continue to be impressed by the products coming out of NTAP's R&D. The company is focused on strengthening its advantage and taking advantage of EMC's weaknesses. This argument about margins, that I quoted above, has not merit. So what if NTAP is getting decreasing margins on its hardware but preserving its overall margin by selling more software? That software on runs on NTAP hardware, which is very cheap. And the hardware requires NTAP's software to anything at all. Now the valuation issue is a different one, and I will leave it alone. I will be taking advantages of drops in share price to buy in when the indicators show that a price rise is likely. I will also be selling when the indicators meet my sell criteria. I hope to buy low, sell high this next year as NTAP proves that its market is right, its products are right, and its overall strategy is right for the continuation of the rise in popularity of its great set of product offerings. For the record, I own no NTAP at this time, but will be re-entering when the stars and little green arrows line up. Also, for the record, I want even be watching EMC's price, cause I want nothing to do with that equity, its management, or its products.

To: stockman_scott who wrote (10359)	12/30/2002 7:38:00 PM
From: DownSouth	Read Replies (2) \| Respond to of 10934

SearchStorage.com Site Editor's 2003 predictions By Mark Lewis Consolidation continues on two levels The industry is still experiencing a shake out and it will get worse before it gets better. Factory revenue for storage hardware is still on the decline -- and it may be until the third quarter of 2003 before this picks up. Storage managers continue to find ways to shrink the data center for easier manageability and to cut costs involved. But a weak first half economy doesn't discourage some cash rich companies from scooping up some startups and smaller companies with good point products. Look for more grandiose industry consolidation. We've seen some smaller scale acquisitions of some closely held companies in 2002 (Sun/Pirus, Brocade/Rhapsody, EMC/Prisa Networks), but 2003 brings some bigger mergers that will strongly impact the industry. Look for some larger companies trying to strengthen their backup and recovery portfolios buy scooping up some quality point products. Some potential takeover targets: Bocada and Commvault. CIM products and standards will be delayed, storage management woes continue Despite posturing by vendors, CIM- and standards-based products make little impact on the market. CIM-based products are delayed in the pipeline and the ones that do make it to market are barely useable. Products from vendors without a base in standards gain -- as users get frustrated with the waiting. iSCSI gains momentum Fibre Channel still is king. More strides are made in this space then are attained in the CIM/standards area. iSCSI isn't adopted in a widespread fashion, but look for good growth very late in the year. NAS market gets NASty Dell/EMC start duking it out with HDS/NetApp for supremacy in this market. This just bodes well for users as prices plummet. Dell squeezes the most out of its factories and continues the path it has been following with PCs. Serial ATA grows, not adopted -- yet While the technology is available, certain bottlenecks remain with Serial ATA. Look for the cheaper and sleeker Serial ATA drives to have more of an impact in the 2004 storage market. Giants Cisco and Microsoft gain ground You can't keep a good tech giant down. Cisco and Microsoft are starting to pay attention to storage. It's easy to see how aggressive Cisco is becoming in the space and this is just going to continue. Look for both of these players to grow by acquisition. Microsoft isn't going to let other companies just walk into the software space unchallenged. Also, the release of .NET Server 2003 -- which is bootable from a SAN and will have new HBA certifications -- helps out. Not having an iSCSI specification in the first release does not affect Microsoft's IP Storage credibility. searchstorage.techtarget.com

To: stockman_scott who wrote (10359)	12/31/2002 9:41:22 AM
From: JakeStraw	Respond to of 10934

Network Appliance (NTAP ): Maintains 3 STARS (hold) Analyst: Richard Stice yahoo.businessweek.com Shares are down 10%, possibly due to investors' concerns regarding escalating competition and potential margin pressure. S&P does expect near-term revenue growth to continue to be constrained by a lack of corporate IT spending. But, S&P thinks Network Appliance's 60%+ gross margin level is sustainable due to its leading position in the network attached storage market and a favorable business mix shift. Network Appliance trades at a discount to the broader market on a price-earnings-to-growth basis. Despite limited visibility and product demand, S&P views the stock's issues as already reflected in the share price.