Storage Earnings Going Nowhere but Up, Up and Away
The Station never fails to be amazed at the amount of money being made throughout this sector. EMC on Wednesday, April 23, turned in a report card showing a cool $3 billion in quarterly revenue -- a good deal of profit included. Hewlett-Packard's Enterprise Storage and Servers division reported Q1 revenue of $4.8 billion, up 9 percent over the prior-year period -- fueled by its new storage blades, which grew 81 percent in revenue. NetApp is expected to report good things on May 21. Storage divisions of Dell, Fujitsu, Hitachi and Sun Microsystems should post good numbers this quarter, too. A few more storage sector earnings news bits from this week: --Data Domain, of Santa Clara, Calif., saw its revenue for Q1 FY08 rise to $52.6 million, an increase of 17 percent from the fourth quarter of 2007 and a cool $5 million more than Wall Street projections. The company's revenues increased 160 percent from Q1 FY07 to Q1 FY08. --FalconStor, of Melville, N.Y., reported 33 percent growth over Q107 ($21 million vs. $16 million) and a whopping 306 percent growth in operating income over a year ago. Looks like its OEM deals with Sun Microsystems and others are going quite well. --Hard drive maker Western Digital, of Lake Forest, Calif., reported a bang-up Q1, bringing in $2.11 billion -- $600,000 over Wall Street projections. --Hard drive maker Seagate Technology, of Scotts Valley, Calif., reported a full 10 percent rise in revenues for its Q3 to $3.10 billion from $2.83 billion in the prior year quarter. How long can this continue? Indefinitely, we're told. The increase in the amount of data being stored isn't slowing down one iota. |
Comments (2)
Well, to look at most of these stocks, the performance of the sector seems to kinda stink. Personally, I hold HP and I expect this well-diversified company to continue to do well.
As for all of the others, with the exception of Hitachi (another well-diversified company), I expect them to under perform the market due to the completely vertical nature of their markets.
While all of the companies (with the exception of HP and Hitachi) have shown short-term blips in their performance they all also exhibit with a continuing long-term decline in their profits and stock prices.
I think this can be explained by the fact that high-capacity high-speed data storage networks and other related equipment seems to make technological leaps and then incremental advances.
Subsequently, companies replace their networks when there is a compelling reason and the new equipment lasts for many years before it again becomes practical for an enterprise to make a huge financial investment in new equipment or related systems.
As far as hard drives go, they are becoming further commoditized and even terabyte storage for the home is becoming passe.
My opinion is that no one should expect to make money over the long term in the data storage business.
Posted by Barry Williams | April 28, 2008 11:04 PM
Thanks for your comment. But I think you're unduly bearish here. The profit numbers don't lie. Stock prices, short and long-term, are another thing; however, these companies are obviously doing quite well at this time.
None of these companies is now performing "under the market," as you say. They ARE the market. What "continuing long-term decline in their profits" are you talking about?
Long-term (5 to 10 years out), who knows what will happen? But for now, these are winners in anybody's book.
And would you be an analyst? Are you a longtime observer of this sector?
I'd be curious to hear from other followers of the financial fortunes of the storage sector.
Thanks for writing.
/cp
Posted by ChrisP | April 29, 2008 1:17 AM