Zeev's Turnips Patch-No Politics (ZEEV)

[TREND1]

Suddenly Storage Isn't So Hot
(Will the Q have to be changed?(g))

By Bill Snyder
Staff Reporter
01/17/2003 05:09 PM EST


Wasn't enterprise storage supposed to be a hot spot? It didn't take long to cool off.

Shares of seven of the major companies in the sector fell an average of 6% Friday, following disappointing earnings by QLogic (QLGC:Nasdaq - news - commentary - research - analysis) earlier in the week, and negative reports by sell-side analysts.


Goldman Sachs analyst Laura Conigliaro cut her rating on the enterprise systems and storage sector to cautious from neutral on Friday.

And in a scathing note last week, U.S. Bancorp Piper Jaffray analyst Ashok Kumar took the sector to task for "short-sighted, fiefdom-building strategies." He also said the sector is becoming commoditized.

"Storage has reached the [same] point as the aircraft industry, where the basic concept of incredibly complex technology is pretty well understood by the critical mass of players and is destined to be exploited as a commodity for ever after," he wrote. "The key to success is building jets that have a lower cost-per-passenger mile. The storage equation is different, but the end result is similar: The only thing that matters now is lowering the cost per GB of storage. That can only mean one thing for storage companies: lower margins for storage products."

Leading the downward parade was Storage Tek, which ended down $1.50, or 6%, to $23.50. Storage Tek is scheduled to announce fourth-quarter and full-year 2002 results after the close of trading on Jan. 22.

QLogic fell $2.10, or 5.5%, to $36, and Emulex (ELX:NYSE - news - commentary - research - analysis) was down $1.32, or 6.1%, to $20.19. EMC (EMC:NYSE - news - commentary - research - analysis) was off 46 cents, or 6.2%, to $6.87; Brocade (BRCD:Nasdaq - news - commentary - research - analysis) dropped 45 cents, or 8%, to $5.13; McData (MCDT:Nasdaq - news - commentary - research - analysis) was off 12 cents, or 1.4%, to $8.26; and Veritas Software (VRTS:Nasdaq - news - commentary - research - analysis) shed 80 cents, or 4.4%, to $17.47.






Larry Dudash
http://www.geocities.com/larrydudash2004/index.html