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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Mr.Gogo who wrote (50568)	1/14/2013 9:12:32 PM
From: E_K_S	1 Recommendation Respond to of 78659

Some things to consider re: XRTX 1) In our 2011 fiscal year, sales to our top six customers accounted for 93% of our revenues with sales to NetApp Inc., Dell Inc. and IBM accounting for 42%, 22% and 13% of our revenues respectively. They will only do as well as these customers. 2) Further consolidation in the industry will lead to reduced demand for XRTX products and/or will be difficult for XRTX to maintain their current margins. 3) NetApp (the largest customer) going forward will use contract manufacturers, under license, as an alternative source for their products. They probably will receive a royalty but this is a huge customer (reflects 42% of their revenue). Therefore, w/ only three customers that represent 77% of revenues is a big risk looking forward. Based on XRTX forward PE of 69 (trailing PE is 16), buying shares of their customers may be a better bargain. Seagate Technology Public Limited Company (STX) or Western Digital Corporation (WDC) might be better value plays with their low PE's (both under 5). I prefer the "cloud computing" sector more than the hardware manufactures. XRTYX may have been a good play before the cloud but now there are better plays in the cloud IMO. EKS