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Speed bumps and hiccups

Speed bumps and hiccups
By Alan Earls

While Wall Street has recently shown signs of life, the recent earnings picture has been less rosy. Storage firms have by no means been exempt. Consider just a few examples:

* In April, EMC announced that its earnings were $0.18 per share for the first quarter, $.02 below the consensus of Wall Street estimates (though 20 percent higher than the $0.15 per share earned in the first quarter of last year).

* The same month, Compaq reported net first quarter income of $78 million, or $0.05 per diluted common share compared to net income of $296 million, or $0.17 per diluted common share in the same quarter last year.

* In May, Hewlett-Packard reported second quarter revenue of $11.6 billion, compared to $12 billion in last year's second quarter, a decrease of 4 percent as reported (flat before the effects of foreign currency) and a decline of 3 percent sequentially.

* In May, Brocade announced net income for the second quarter of $12 million as compared to the $13.3 million reported in the same quarter last year. Diluted net income was $0.05 as compared to the $0.06 reported in the same quarter a year earlier.

What does all this mean for storage consumers? According to John Webster, analyst at Nashua, NH-based Illuminata, two things suffer. First, R&D budgets can get cut with new product plans put on hold.

"In the storage industry right now that's probably OK because many users are still catching up to the products that were introduced one or two years ago," he notes.

Secondly, the earnings picture makes users more conservative about vendor selection.

"Good economic/market conditions can float all boats, therefore a user worries less about a vendor's financial condition," says Webster. "But when times are harder, users are more inclined to choose vendors with strong market positions, and the weaker ones have a tougher time selling."

Additional Resources:

* Want to comment about the storage vendor market or other news from this tip? Visit our searchStorage Sound Off discussion forum.

* Browse through our archive of seachStorage SAN/NAS Industry Update tips.

* Got a storage networking question, opinion, or piece of advice? Post it on our searchStorage Storage Networking discussion forum.

About the author: Alan Earls is a freelance writer in Franklin, MA.

This was last published in May 2001

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