November 2, 2010 – With virtually all storage vendors racking up impressive revenue numbers over the last couple quarters, it’s no surprise that CommVault turned in solid performance figures for its fiscal second quarter today. In fact, the company achieved record revenue of $75.2 million, an increase of 13% over the same period a year ago, and also up 13% over the previous quarter.
Breaking those numbers down a bit, software revenue was $35.8 million, up 7% year-over-year and 26% sequentially. Services revenue was $39.5 million, up 19% year-over-year and 13% over the prior quarter. Income from operations was $9.2 million. That compares to $6.5 million in the same quarter last year.
CommVault executives highlighted a number of recent parternships that could fuel growth, including a distribution agreement with Hitachi Ltd. subsidiary Hitachi Computer Peripherals, as well as a partnership with Mezeo Software that will integrate CommVault’s Simpana software with the Mezeo Cloud Storage Platform.
But the big highlight in the quarter was CommVault’s launch of the long-anticipated Simpana 9 software, which included significant enhancements for data protection in virtual server environments, as well as source-based (in addition to target-based) deduplication and integrated array-based snapshots (see “CommVault unveils Simpana 9”).
Even though it was only introduced on October 5, Simpana 9 accounted for 13% of CommVault’s software license revenue in its second quarter, according to Stifel Nicolaus analyst Aaron C. Rakers.
Rakers also reported that the number of >$100,000 deals in CommVault’s Q2 were up 17% year-over-year and 45% sequentially, indicating that CommVault is well-positioned at the high end of the market vs. chief rival Symantec.
(Rakers maintained his hold rating on CommVault’s shares [NSDQ: CVLT], which were trading around $29 today.)
Related blog post: “Who will be acquired next? And the Top 10 are . . .”
Showing posts with label CommVault. Show all posts
Showing posts with label CommVault. Show all posts
Tuesday, November 2, 2010
Monday, October 4, 2010
Who will be acquired next? And the Top 10 are . . .
UPDATED October 21, 2010 -- Following HP's $2.4 billion acquisition of 3PAR, speculation continues to run rampant over which storage vendors will be acquired next. Whether it's a good thing or a bad thing from the perspective of end users, further contraction in the industry is inevitable as the largest IT vendors attempt to control the entire IT stack and the pure-play storage vendors plug the gaps in their product lines in order to goose revenue growth.
For the following list of the Top 10 storage acquisition candidates, I factored in the opinions of InfoStor.com readers, which I received after posting "The Top 10 storage acquisitions of 2010." Interestingly, the majority of the reader responses came from channel professionals -- VARs and integrators -- leading me to believe that channel pros are much more interested in mergers and acquisitions than are end users. I also factored in opinions from industry and financial analysts. And topped it off with my own misguided opinions.
(Note: The ticker symbol links below take you to that company's entry page on the InfoStor Market Index, which provides up-to-the-minute info on the company's stock as well as company- and competitor-related news.)
#1 -- Isilon
I don't understand why CommVault's (NSDQ: CLVT) stock jumped so high during the HP-Dell-3PAR bidding war, but it did. I guess it was because CommVault has been an acquisition speculation darling for years.
CommVault has done a great job stealing revenue from the big four vendors in the data protection space, in part because CommVault's underlying architecture is newer and designed better for rapid enhancements, as evidenced in the recent release of its Simpana 9 software (see "CommVault unveils Simpana 9").
Conventional wisdom on Wall Street has Dell (NSDQ: DELL) as the most likely suitor under the assumption that none of the leading backup/recovery vendors (EMC, Symantec, IBM, CA) would be interested in CommVault, but I'm not so sure about that. Any of those vendors would have to eat some crow if they acquired CommVault, but they might be better positioned for the long haul.
Another possible CommVault suitor: NetApp which, by the way, is the #4 storage software vendor -- ahead of CA and HP (see "The Top 6 storage software vendors").
In addition to the fact that many financial analysts put the company at the top of their storage acquisition target lists, CommVault earns the #2 spot on this list because I think the storage M&A focus is going to shift from hardware to software. And with CommVault, it's hard to argue with low debt, high growth and high margins.
#3, #4 -- Compellent, Xiotech
Isilon, Compellent and Xiotech have all been cited often as potential Dell acquisitions post-3PAR/HP. I doubt it, because Isilon/Compellent/Xiotech are gap pluggers rather than the game changer that 3PAR would have been for Dell. Isilon, Compellent or Xiotech don't give Dell the high-end array technology that would enable Dell to go up against EMC/IBM/Hitachi, although they would be good complements to Dell's EqualLogic line. On the other hand, any one of these disk array vendors would help Dell doff its "Dude, you're getting a Dell" image.
Given their technology differentiators, and the difficulty of being a relatively small player in the contracting disk array market, it's likely that one or both of these vendors will be acquired by someone.
Xiotech, which is not publicly traded and has a nice differentiator with its Intelligent Storage Element (ISE) technology, would be the least expensive buy in this category.
The question with Compellent is whether the company has enough differentiation from what the potential acquirers already have in their portfolios.
#5 -- Permabit
Earlier this year, Permabit introduced an "OEM embeddable" version of its data deduplication software. dubbed Albierio. The company seems to be off to a good start with its OEM strategy, having already racked up reseller deals with BlueArc and Xiotech (see "Data deduplication: Permabit finds success with OEM model").
As the last standing "independent" data deduplication player, Permabit could thrive with its OEM model, but in light of the IBM-Storwize and Dell-Ocarina acquisitions in the data reduction space I think Permabit is an attractive acquisition candidate. The company's focus now is on deduplication for primary storage, but there's no reason Permabit's technology couldn't be used across all storage tiers -- and that could be very attractive for some of the larger storage vendors that have a diverse mix of data reduction solutions in their portfolios. Of course, that assumes that a "one size fits all" approach to data reduction is the way the larger vendors want to go in this space.
#6 - Brocade
IBM has been mentioned most frequently as a potential suitor for Brocade. That might have changed recently with Big Blue's announcement that it plans to acquire Blade Network Technologies (BNT), making it less likely that IBM would go for Brocade.
BNT specializes in blade and rack Ethernet switches, so it's not an overlap with Brocade's business, but the IBM-BNT acquisition will still dampen speculation that IBM will scoop up Brocade. More likely, perhaps, IBM will go after Juniper Networks. (Both Brocade and Juniper are IBM partners and, making it even more interesting, Juniper is a BNT partner.)
If we take IBM out of the Brocade acquirer lineup, that would leave Dell as the most likely acquirer (although Dell is also tight with Juniper). But that goes to the heart of the question of whether Dell will, post-3PAR, try for another disk array vendor (Isilon, Compellent, Xiotech?), software vendor (CommVault?) or surprise everyone and light out into LAN/SANland via Brocade.
Making a Dell acquisition shift toward networking more likely, Dell recently hired a former Cisco exec -- Dario Zamarian -- to run its networking business. Assuming Dell turns to networking in its acquisition spree, it's a 50/50 bet between Brocade and Juniper, according to some Wall Street wags.
In an article posted on MarketWatch (see "Brocade targeted by M&A rumor mill"), Wedbush analyst Kaushik Roy was quoted as saying, "It makes a lot more sense for Dell to buy Brocade than IBM. With Dell, it's a no-brainer. If Dell has half of a brain, they should be taking Brocade out right now."
Then again, if Dell goes after Brocade (NSDQ: BRCD), they could wind up in another crazy bidding war with, say, IBM or Oracle. And Dell's been there, done that.
In addition to IBM and Dell, analysts have cited Oracle and Hitachi as possible acquirers.
#7 -- BlueArc
Hitachi Data Systems (HDS) has been mentioned as a potential suitor for BlueArc, but it doesn't seem to be in HDS' genes to take the acquisitions route. But HDS and BlueArc do have a tight relationship and BlueArc has some attractive technology differentiators.
# 8 -- FalconStor
Only one of our readers mentioned FalconStor as an acquisition target, and it was in the context of the company potentially being acquired by HDS or NEC, but FalconStor would be relatively inexpensive and the company has great technology (although not everybody knows it because FalconStor's software is often sold "under the covers" by its OEMs and resellers).
In addition to getting storage management and data protection software (VTL, CDP, data deduplication, replication, etc.) across a variety of product lines, an acquirer could put the hurt on a lot of competitors because, although a relatively small company, FalconStor's tentacles reach across a lot of vendors via its reseller deals.
The possibility of FalconStor (NSDQ: FALC) being acquired heightened recently with the resignation of ReiJane Huai, the company's CEO. In the wake of the resignation, FalconStor tapped Jim McNiel as interim CEO and president. Some analysts think that McNiel may be more open to acquisition than was Huai.
#9 -- Symantec
The latest rumors regarding Symantec centered on Microsoft as a potential acquirer (see "Is Microsoft Looking to Buy Symantec?" on InfoStor sister site eSecurity Planet).
However, that (unlikely) move would be more for Symantec's security product line, rather than its storage software, and would be in response to Intel's acquisition of McAfee.
Given the breadth of Symantec's product line, and the fact that the company would be expensive and is not a pure-play storage vendor, I put Symantec low on this list. I don't see Symantec being bought any time soon, if only because of the company's huge market cap.
#10 -- NetApp
Rumors about NetApp (NSDQ: NTAP) being acquired have existed as long as the rumors surrounding CommVault and Brocade have, maybe longer. I think the time to buy NetApp is long gone, but due to the persistence of the rumors the company still makes our Top 10 list.
I see NetApp more as an acquirer than a target. The problem with that (for NetApp) is that, if the IT market does contract down to five or six soup-to-nuts vendors, NetApp doesn't have a chance of making that list even if it does dip into its deep piggy bank to make some acquisitions. It's that logic that keeps NetApp on our Top 10 acquisition targets list.
One other company that occasionally comes up in acquisition conversations is Quantum. This would be for the company's data deduplication technology and products. However, an acquirer would also get Quantum's tape business, and I don't think any of the likely acquiring vendors is looking to add tape to their portfolio.
And in the Least-Likely-But-Often-Mentioned category of acquisition targets: EMC. The Wall Street Journal reported last week that Oracle may be eying EMC (see "EMC Shares Rise On Oracle Buyout Rumor"). Sure, that would fill in the Tier-1 storage hole in Oracle's portfolio and, more importantly, give them VMware, but I still think the Oracle-EMC acquisition speculation is ludicrous.
Related blog post:
The Top 10 storage acquisitions of 2010
For the following list of the Top 10 storage acquisition candidates, I factored in the opinions of InfoStor.com readers, which I received after posting "The Top 10 storage acquisitions of 2010." Interestingly, the majority of the reader responses came from channel professionals -- VARs and integrators -- leading me to believe that channel pros are much more interested in mergers and acquisitions than are end users. I also factored in opinions from industry and financial analysts. And topped it off with my own misguided opinions.
(Note: The ticker symbol links below take you to that company's entry page on the InfoStor Market Index, which provides up-to-the-minute info on the company's stock as well as company- and competitor-related news.)
#1 -- Isilon
Isilon scooted to the top of this list because of two recent developments: (a) The company hired Qatalyst Partners to solicit potential acquisition offers. Qatalyst was the advisor to Data Domain when EMC acquired Data Domain, and Qatalyst also shepherded the HP-3PAR acquisition. (b) The NY Post reported on Friday that EMC may be close to acquiring Isilon for about $2 billion (see "EMC in exclusive talks to buy Isilon").
Isilon is known primarily for its strengths in scale-out NAS, but the company recently added support for the iSCSI SAN protocol in its OneFS operating system, enabling both file (NAS) and block (SAN) I/O under a single file system (although Isilon's storage systems do not support the Fibre Channel or FCoE protocols).
In addition to EMC, financial analysts have cited Dell, HP and IBM (and, less likely, Oracle or Cisco) as potential acquirers of Isilon (NSDQ: ISLN).
#2 -- CommVaultI don't understand why CommVault's (NSDQ: CLVT) stock jumped so high during the HP-Dell-3PAR bidding war, but it did. I guess it was because CommVault has been an acquisition speculation darling for years.
CommVault has done a great job stealing revenue from the big four vendors in the data protection space, in part because CommVault's underlying architecture is newer and designed better for rapid enhancements, as evidenced in the recent release of its Simpana 9 software (see "CommVault unveils Simpana 9").
Conventional wisdom on Wall Street has Dell (NSDQ: DELL) as the most likely suitor under the assumption that none of the leading backup/recovery vendors (EMC, Symantec, IBM, CA) would be interested in CommVault, but I'm not so sure about that. Any of those vendors would have to eat some crow if they acquired CommVault, but they might be better positioned for the long haul.
Another possible CommVault suitor: NetApp which, by the way, is the #4 storage software vendor -- ahead of CA and HP (see "The Top 6 storage software vendors").
In addition to the fact that many financial analysts put the company at the top of their storage acquisition target lists, CommVault earns the #2 spot on this list because I think the storage M&A focus is going to shift from hardware to software. And with CommVault, it's hard to argue with low debt, high growth and high margins.
#3, #4 -- Compellent, Xiotech
Isilon, Compellent and Xiotech have all been cited often as potential Dell acquisitions post-3PAR/HP. I doubt it, because Isilon/Compellent/Xiotech are gap pluggers rather than the game changer that 3PAR would have been for Dell. Isilon, Compellent or Xiotech don't give Dell the high-end array technology that would enable Dell to go up against EMC/IBM/Hitachi, although they would be good complements to Dell's EqualLogic line. On the other hand, any one of these disk array vendors would help Dell doff its "Dude, you're getting a Dell" image.
Given their technology differentiators, and the difficulty of being a relatively small player in the contracting disk array market, it's likely that one or both of these vendors will be acquired by someone.
Xiotech, which is not publicly traded and has a nice differentiator with its Intelligent Storage Element (ISE) technology, would be the least expensive buy in this category.
The question with Compellent is whether the company has enough differentiation from what the potential acquirers already have in their portfolios.
#5 -- Permabit
Earlier this year, Permabit introduced an "OEM embeddable" version of its data deduplication software. dubbed Albierio. The company seems to be off to a good start with its OEM strategy, having already racked up reseller deals with BlueArc and Xiotech (see "Data deduplication: Permabit finds success with OEM model").
As the last standing "independent" data deduplication player, Permabit could thrive with its OEM model, but in light of the IBM-Storwize and Dell-Ocarina acquisitions in the data reduction space I think Permabit is an attractive acquisition candidate. The company's focus now is on deduplication for primary storage, but there's no reason Permabit's technology couldn't be used across all storage tiers -- and that could be very attractive for some of the larger storage vendors that have a diverse mix of data reduction solutions in their portfolios. Of course, that assumes that a "one size fits all" approach to data reduction is the way the larger vendors want to go in this space.
#6 - Brocade
IBM has been mentioned most frequently as a potential suitor for Brocade. That might have changed recently with Big Blue's announcement that it plans to acquire Blade Network Technologies (BNT), making it less likely that IBM would go for Brocade.
BNT specializes in blade and rack Ethernet switches, so it's not an overlap with Brocade's business, but the IBM-BNT acquisition will still dampen speculation that IBM will scoop up Brocade. More likely, perhaps, IBM will go after Juniper Networks. (Both Brocade and Juniper are IBM partners and, making it even more interesting, Juniper is a BNT partner.)
If we take IBM out of the Brocade acquirer lineup, that would leave Dell as the most likely acquirer (although Dell is also tight with Juniper). But that goes to the heart of the question of whether Dell will, post-3PAR, try for another disk array vendor (Isilon, Compellent, Xiotech?), software vendor (CommVault?) or surprise everyone and light out into LAN/SANland via Brocade.
Making a Dell acquisition shift toward networking more likely, Dell recently hired a former Cisco exec -- Dario Zamarian -- to run its networking business. Assuming Dell turns to networking in its acquisition spree, it's a 50/50 bet between Brocade and Juniper, according to some Wall Street wags.
In an article posted on MarketWatch (see "Brocade targeted by M&A rumor mill"), Wedbush analyst Kaushik Roy was quoted as saying, "It makes a lot more sense for Dell to buy Brocade than IBM. With Dell, it's a no-brainer. If Dell has half of a brain, they should be taking Brocade out right now."
Then again, if Dell goes after Brocade (NSDQ: BRCD), they could wind up in another crazy bidding war with, say, IBM or Oracle. And Dell's been there, done that.
In addition to IBM and Dell, analysts have cited Oracle and Hitachi as possible acquirers.
#7 -- BlueArc
Hitachi Data Systems (HDS) has been mentioned as a potential suitor for BlueArc, but it doesn't seem to be in HDS' genes to take the acquisitions route. But HDS and BlueArc do have a tight relationship and BlueArc has some attractive technology differentiators.
# 8 -- FalconStor
Only one of our readers mentioned FalconStor as an acquisition target, and it was in the context of the company potentially being acquired by HDS or NEC, but FalconStor would be relatively inexpensive and the company has great technology (although not everybody knows it because FalconStor's software is often sold "under the covers" by its OEMs and resellers).
In addition to getting storage management and data protection software (VTL, CDP, data deduplication, replication, etc.) across a variety of product lines, an acquirer could put the hurt on a lot of competitors because, although a relatively small company, FalconStor's tentacles reach across a lot of vendors via its reseller deals.
The possibility of FalconStor (NSDQ: FALC) being acquired heightened recently with the resignation of ReiJane Huai, the company's CEO. In the wake of the resignation, FalconStor tapped Jim McNiel as interim CEO and president. Some analysts think that McNiel may be more open to acquisition than was Huai.
#9 -- Symantec
The latest rumors regarding Symantec centered on Microsoft as a potential acquirer (see "Is Microsoft Looking to Buy Symantec?" on InfoStor sister site eSecurity Planet).
However, that (unlikely) move would be more for Symantec's security product line, rather than its storage software, and would be in response to Intel's acquisition of McAfee.
Given the breadth of Symantec's product line, and the fact that the company would be expensive and is not a pure-play storage vendor, I put Symantec low on this list. I don't see Symantec being bought any time soon, if only because of the company's huge market cap.
#10 -- NetApp
Rumors about NetApp (NSDQ: NTAP) being acquired have existed as long as the rumors surrounding CommVault and Brocade have, maybe longer. I think the time to buy NetApp is long gone, but due to the persistence of the rumors the company still makes our Top 10 list.
I see NetApp more as an acquirer than a target. The problem with that (for NetApp) is that, if the IT market does contract down to five or six soup-to-nuts vendors, NetApp doesn't have a chance of making that list even if it does dip into its deep piggy bank to make some acquisitions. It's that logic that keeps NetApp on our Top 10 acquisition targets list.
One other company that occasionally comes up in acquisition conversations is Quantum. This would be for the company's data deduplication technology and products. However, an acquirer would also get Quantum's tape business, and I don't think any of the likely acquiring vendors is looking to add tape to their portfolio.
And in the Least-Likely-But-Often-Mentioned category of acquisition targets: EMC. The Wall Street Journal reported last week that Oracle may be eying EMC (see "EMC Shares Rise On Oracle Buyout Rumor"). Sure, that would fill in the Tier-1 storage hole in Oracle's portfolio and, more importantly, give them VMware, but I still think the Oracle-EMC acquisition speculation is ludicrous.
Related blog post:
The Top 10 storage acquisitions of 2010
Saturday, August 7, 2010
Earnings recap: ELX, QLGC, CVLT, SYMC, PAR, CML, STEC, HDS
August 6, 2010 – Over the past couple weeks, a number of storage vendors reported quarterly earnings (or lack thereof). Overall, the storage industry seems to be on a slow rebound, driven in part by technology refreshes at the server, PC, OS and network levels.
The financial picture started out brightly with a stellar report from Isilon (see “Isilon stock soars on Q2 earnings report”), but after that results were a mixed bag. Here’s a quick recap:
EMULEX (NYSE: ELX)
The numbers: Emulex reported its fourth quarter results yesterday, with net revenues of $103.1 million, an increase of 30% over the same quarter last year and a 1% increase over the previous quarter. Q4 GAAP net loss was $2.5 million, compared to $4.5 million in Q4 of fiscal 2009.
Highlights: President and CEO Jim McCluney highlighted the company’s 10GbE/FCoE technology and design wins, most notably with HP for Emulex’s OneConnect UCNA technology. Emulex also has design wins with Cisco, Dell, EMC, Fujitsu and HDS.
Comments: Emulex bet the farm on 10GbE, and with the HP LOM win the company appears to be poised for impressive growth, although the timing of that ramp is unclear. The company will also benefit from the upcoming server upgrade cycle, which should accelerate in the fourth quarter. Emulex’s acquisition of ServerEngines (expensive but necessary) is expected to be finalized at the end of this month.
QLOGIC (NASDAQ: QLGC)
The numbers: For the three months ended June 27, QLogic earned $25.4 million, up 70% percent from $15 million in the same period a year earlier. Revenue rose 16% to $142.6 million, vs. $122.8 million a year ago. Analysts were expecting $144.1 million in revenue.
Highlights: Wall Street can be cruel to companies that have a lock on their primary markets, such as QLogic and Emulex in the Fibre Channel HBA space, because of consistently high expectations: Although QLogic’s numbers were quite good, its stock price took a hit on the day of its quarterly earnings announcement, dropping 14% at one point.
Interesting tidbit: The company had $10 million in revenue “from products serving host applications for the fast-growing converged network [FCoE] market.”
Comments: Although QLogic’s future success does in fact depend on its performance in the FCoE/CEE/DCB space, it’s too early to factor FCoE performance into QLogic’s stock performance. Next year will be The Year of FCoE reckoning, as the QLogic-Emulex-Brocade-Broadcom-Intel battle reaches war status.
COMMVAULT (NASDAQ: CVLT)
The numbers: Revenues for CommVault’s first fiscal quarter were $66.3 million, an increase of 10% over Q1 2010 and a decrease of 10% vs. the previous quarter. Net income was $3.5 million, up $1.1 million vs. the same period a year ago.
Highlights: Dell accounted for about 26% of CommVault’s revenue, up 21% year-over-year.
Comments: Some observers predicted that Dell’s recent acquisition of Ocarina Networks (see “Dell to acquire Ocarina for data deduplication”) spelled trouble for CommVault. That assumed that Dell was headed toward a one-size-fits-all approach to data deduplication. I don’t think so. Dell will probably continue with its existing dedupe-related reseller deals (CommVault, Symantec, EMC Data Domain) while leveraging the Ocarina technology in specific markets (e.g., primary storage optimization in image-intensive environments).
One good reason to stick with CommVault’s stock is the upcoming release of Simpana 9, which I understand will include some significant improvements in the areas of deduplication and virtualization.
SYMANTEC (NASDAQ: SYMC)
The numbers: Symantec reported revenue of $1.433 billion in its first fiscal quarter, essentially unchanged from $1.432 billion in last year’s Q1. But the earnings picture was brighter. The company reported net income of $161 million, compared to $74 million in Q1 2009.
Highlights: Revenue for Symantec’s largest business segment – storage and server management – fell 5% year-over-year to $524 million.
Comments: Symantec’s storage revenues should pick up in the next few quarters due to a ramp in sales of its Backup Express 10 and NetBackup 7 software (both of which were introduced early this year) and a new version of Enterprise Vault this quarter.
3PAR (NYSE: PAR)
The numbers: 3PAR’s quarterly revenues were $54.3 million, an increase of 22% vs. $44.5 million in the same period a year ago. GAAP net loss was $1.8 million, virtually identical to the company’s loss in the year earlier quarter.
Highlights: 3PAR president and CEO David Scott emphasized the company’s strengths in “multi-tenant clustering, thin technologies, and autonomic management,” all of which play well in the cloud.
Comments: Not as impressive as Isilon’s quarterly report, but companies such as 3PAR, Isilon and Compellent (see below) are proving that upstarts can put a dent in the armor of the market share leaders by leveraging truly differentiated technology, at least for awhile.
COMPELLENT (NYSE: CML)
The numbers: In its second fiscal quarter ended June 30, Compellent posted record revenue of $36.5 million, a 27% increase over the same quarter in 2009 and a 15% increase over the first quarter of 2010. GAAP net loss was $172,000, and non-GAAP net income was $1.5 million.
Highlights: Compellent claims an installed base of 2,124 customers, an increase of 182 customers vs. the previous quarter. Cash and investments totaled $132 million.
Comments: Compellent’s data movement/tiering/management technology, dubbed Fluid Data, appears to be a primary catalyst behind Compellent’s growth. Pipar Jeffray analysts noted that key risks for Compellent include “reliance on channel partners, limited international exposure, well-capitalized competitors and a challenging macro-economic backdrop.”
STEC (NASDAQ: STEC)
The numbers: Solid-state disk (SSD) specialist STEC posted revenue of $61.3 million in the second quarter. That’s a decrease of 29.1% from the second quarter of 2009, but an increase of 58% from the first quarter of 2010.
Highlights: STEC bounced back from a disappointing first quarter, posting non-GAAP gross profit margin of 42.7% vs. 34.2% in the first quarter, having resolved inventory carryover issues with its largest customer (EMC). For the next quarter, company officials are predicting revenue in the $78 million to $80 million range, indicating a continued resurgence.
Comments: STEC stock has been on a roller-coaster ride, with its 52-week price ranging from $9.47 to $42.50 a share. The company has an early lead in the enterprise SSD market, with design wins at most of the leading disk array vendors. And STEC is still the single source for SSDs at most of its customers. STEC recently introduced MLC SSDs, augmenting its SLC-based SSD product line with lower-cost alternatives. (See “MLC vs. SLC flash for enterprise SSD” on infostor.com.) And the next generation of STEC’s Zeus and Mach SSDs are due later this year, reportedly with 2X the capacity.
HITACHI DATA SYSTEMS (HDS)
Hitachi Ltd. recently reported its Q1FY10 financial results. The company’s HDS operation is not publicly traded, but here’s a recap of HDS’ results. NOTE: The following is excerpted from a report by Aaron C. Rakers, managing director at Stifel Nicolaus.
The numbers: “Consolidated revenues (revenues from HDS + revenues of storage systems sales in Japan) for the first quarter fiscal year 2010 were $804 million, up 13% year on year. This was HDS’ third consecutive record quarter. The first quarter, which ended June 30, was the best Q1 in HDS history, beating the company’s previous best first quarter by $100 million.”
Highlights: Year-over-year revenues grew across all geographies: Americas (+27%), EMEA (+4%), APAC (+19%, excluding Japan domestic sales).
Comments (from Aaron Rakers): “HDS’ Q1FY10 results continue to show increased diversity between hardware, software and services, with solid growth across all areas. Fueled by strong AMS systems sales and increased USP V/VM platform adoption, the company’s hardware revenue was up double digits from Q1FY09. Likewise, software and services revenues grew double digits year-over-year and now account for nearly half of HDS’ total revenue, which is a higher percentage compared to the previous year. The increase in software and services revenue was attributed to increased traction in virtualization software such as Hitachi Dynamic Provisioning. HDS’ file and content portfolio, which includes the Hitachi High-performance NAS Platform and Hitachi Content Platform products, also showed strong year-on-year growth; in fact, the file and content portfolio recorded a 200% increase in FY2009 compared to FY2008.”
Related articles:
EMC breaks Q2 revenue record (blog post, July 21)
NetApp wows Wall Street, doubles quarterly profits (news story, May 26)
The financial picture started out brightly with a stellar report from Isilon (see “Isilon stock soars on Q2 earnings report”), but after that results were a mixed bag. Here’s a quick recap:
EMULEX (NYSE: ELX)
The numbers: Emulex reported its fourth quarter results yesterday, with net revenues of $103.1 million, an increase of 30% over the same quarter last year and a 1% increase over the previous quarter. Q4 GAAP net loss was $2.5 million, compared to $4.5 million in Q4 of fiscal 2009.
Highlights: President and CEO Jim McCluney highlighted the company’s 10GbE/FCoE technology and design wins, most notably with HP for Emulex’s OneConnect UCNA technology. Emulex also has design wins with Cisco, Dell, EMC, Fujitsu and HDS.
Comments: Emulex bet the farm on 10GbE, and with the HP LOM win the company appears to be poised for impressive growth, although the timing of that ramp is unclear. The company will also benefit from the upcoming server upgrade cycle, which should accelerate in the fourth quarter. Emulex’s acquisition of ServerEngines (expensive but necessary) is expected to be finalized at the end of this month.
QLOGIC (NASDAQ: QLGC)
The numbers: For the three months ended June 27, QLogic earned $25.4 million, up 70% percent from $15 million in the same period a year earlier. Revenue rose 16% to $142.6 million, vs. $122.8 million a year ago. Analysts were expecting $144.1 million in revenue.
Highlights: Wall Street can be cruel to companies that have a lock on their primary markets, such as QLogic and Emulex in the Fibre Channel HBA space, because of consistently high expectations: Although QLogic’s numbers were quite good, its stock price took a hit on the day of its quarterly earnings announcement, dropping 14% at one point.
Interesting tidbit: The company had $10 million in revenue “from products serving host applications for the fast-growing converged network [FCoE] market.”
Comments: Although QLogic’s future success does in fact depend on its performance in the FCoE/CEE/DCB space, it’s too early to factor FCoE performance into QLogic’s stock performance. Next year will be The Year of FCoE reckoning, as the QLogic-Emulex-Brocade-Broadcom-Intel battle reaches war status.
COMMVAULT (NASDAQ: CVLT)
The numbers: Revenues for CommVault’s first fiscal quarter were $66.3 million, an increase of 10% over Q1 2010 and a decrease of 10% vs. the previous quarter. Net income was $3.5 million, up $1.1 million vs. the same period a year ago.
Highlights: Dell accounted for about 26% of CommVault’s revenue, up 21% year-over-year.
Comments: Some observers predicted that Dell’s recent acquisition of Ocarina Networks (see “Dell to acquire Ocarina for data deduplication”) spelled trouble for CommVault. That assumed that Dell was headed toward a one-size-fits-all approach to data deduplication. I don’t think so. Dell will probably continue with its existing dedupe-related reseller deals (CommVault, Symantec, EMC Data Domain) while leveraging the Ocarina technology in specific markets (e.g., primary storage optimization in image-intensive environments).
One good reason to stick with CommVault’s stock is the upcoming release of Simpana 9, which I understand will include some significant improvements in the areas of deduplication and virtualization.
SYMANTEC (NASDAQ: SYMC)
The numbers: Symantec reported revenue of $1.433 billion in its first fiscal quarter, essentially unchanged from $1.432 billion in last year’s Q1. But the earnings picture was brighter. The company reported net income of $161 million, compared to $74 million in Q1 2009.
Highlights: Revenue for Symantec’s largest business segment – storage and server management – fell 5% year-over-year to $524 million.
Comments: Symantec’s storage revenues should pick up in the next few quarters due to a ramp in sales of its Backup Express 10 and NetBackup 7 software (both of which were introduced early this year) and a new version of Enterprise Vault this quarter.
3PAR (NYSE: PAR)
The numbers: 3PAR’s quarterly revenues were $54.3 million, an increase of 22% vs. $44.5 million in the same period a year ago. GAAP net loss was $1.8 million, virtually identical to the company’s loss in the year earlier quarter.
Highlights: 3PAR president and CEO David Scott emphasized the company’s strengths in “multi-tenant clustering, thin technologies, and autonomic management,” all of which play well in the cloud.
Comments: Not as impressive as Isilon’s quarterly report, but companies such as 3PAR, Isilon and Compellent (see below) are proving that upstarts can put a dent in the armor of the market share leaders by leveraging truly differentiated technology, at least for awhile.
COMPELLENT (NYSE: CML)
The numbers: In its second fiscal quarter ended June 30, Compellent posted record revenue of $36.5 million, a 27% increase over the same quarter in 2009 and a 15% increase over the first quarter of 2010. GAAP net loss was $172,000, and non-GAAP net income was $1.5 million.
Highlights: Compellent claims an installed base of 2,124 customers, an increase of 182 customers vs. the previous quarter. Cash and investments totaled $132 million.
Comments: Compellent’s data movement/tiering/management technology, dubbed Fluid Data, appears to be a primary catalyst behind Compellent’s growth. Pipar Jeffray analysts noted that key risks for Compellent include “reliance on channel partners, limited international exposure, well-capitalized competitors and a challenging macro-economic backdrop.”
STEC (NASDAQ: STEC)
The numbers: Solid-state disk (SSD) specialist STEC posted revenue of $61.3 million in the second quarter. That’s a decrease of 29.1% from the second quarter of 2009, but an increase of 58% from the first quarter of 2010.
Highlights: STEC bounced back from a disappointing first quarter, posting non-GAAP gross profit margin of 42.7% vs. 34.2% in the first quarter, having resolved inventory carryover issues with its largest customer (EMC). For the next quarter, company officials are predicting revenue in the $78 million to $80 million range, indicating a continued resurgence.
Comments: STEC stock has been on a roller-coaster ride, with its 52-week price ranging from $9.47 to $42.50 a share. The company has an early lead in the enterprise SSD market, with design wins at most of the leading disk array vendors. And STEC is still the single source for SSDs at most of its customers. STEC recently introduced MLC SSDs, augmenting its SLC-based SSD product line with lower-cost alternatives. (See “MLC vs. SLC flash for enterprise SSD” on infostor.com.) And the next generation of STEC’s Zeus and Mach SSDs are due later this year, reportedly with 2X the capacity.
HITACHI DATA SYSTEMS (HDS)
Hitachi Ltd. recently reported its Q1FY10 financial results. The company’s HDS operation is not publicly traded, but here’s a recap of HDS’ results. NOTE: The following is excerpted from a report by Aaron C. Rakers, managing director at Stifel Nicolaus.
The numbers: “Consolidated revenues (revenues from HDS + revenues of storage systems sales in Japan) for the first quarter fiscal year 2010 were $804 million, up 13% year on year. This was HDS’ third consecutive record quarter. The first quarter, which ended June 30, was the best Q1 in HDS history, beating the company’s previous best first quarter by $100 million.”
Highlights: Year-over-year revenues grew across all geographies: Americas (+27%), EMEA (+4%), APAC (+19%, excluding Japan domestic sales).
Comments (from Aaron Rakers): “HDS’ Q1FY10 results continue to show increased diversity between hardware, software and services, with solid growth across all areas. Fueled by strong AMS systems sales and increased USP V/VM platform adoption, the company’s hardware revenue was up double digits from Q1FY09. Likewise, software and services revenues grew double digits year-over-year and now account for nearly half of HDS’ total revenue, which is a higher percentage compared to the previous year. The increase in software and services revenue was attributed to increased traction in virtualization software such as Hitachi Dynamic Provisioning. HDS’ file and content portfolio, which includes the Hitachi High-performance NAS Platform and Hitachi Content Platform products, also showed strong year-on-year growth; in fact, the file and content portfolio recorded a 200% increase in FY2009 compared to FY2008.”
Related articles:
EMC breaks Q2 revenue record (blog post, July 21)
NetApp wows Wall Street, doubles quarterly profits (news story, May 26)
Friday, June 11, 2010
Storage software market: CommVault grows revenues 25% y-o-y
June 11, 2010 – Revenue performance in the storage software market was lackluster in the first quarter of this year, although the market did exceed $3 billion – a 7.2% growth over the same quarter last year. Given the sorry state of IT spending a year ago, that qualifies as lackluster.
In contrast, the external disk array market posted year-over-year growth of 18.8% in the first quarter (see “Disk array SmackDown: NetApp vs. IBM, Dell vs. HP”).
With a few exceptions, storage software vendors posted modest revenue growth in Q1 2010 vs. Q1 2009: EMC (13.7% revenue growth), IBM (11%), NetApp (8.1%), CA (7.2%) and HP (8.7%). The only vendor posting negative growth was Symantec, with a slight 0.5% drop.
EMC topped the list with a 23% market share on Q1 revenue of $696 million, followed by Symantec (17.5% market share), IBM (14.2%), NetApp (8.3%), and CA and HP in a virtual tie with 3.9% and 3.5% market shares, respectively.
But the most impressive numbers came in the data protection and recovery segment of the overall storage software market, where EMC racked up revenue growth of 46.6% and CommVault, although it didn’t crack the top six vendors list, increased revenue by an impressive 24.9% in the first quarter vs. the same period a year ago.
For IDC’s full press release and more stats, see “Storage Software Market Delivers Good Growth and Continues Signs of Recovery.”
In contrast, the external disk array market posted year-over-year growth of 18.8% in the first quarter (see “Disk array SmackDown: NetApp vs. IBM, Dell vs. HP”).
With a few exceptions, storage software vendors posted modest revenue growth in Q1 2010 vs. Q1 2009: EMC (13.7% revenue growth), IBM (11%), NetApp (8.1%), CA (7.2%) and HP (8.7%). The only vendor posting negative growth was Symantec, with a slight 0.5% drop.
EMC topped the list with a 23% market share on Q1 revenue of $696 million, followed by Symantec (17.5% market share), IBM (14.2%), NetApp (8.3%), and CA and HP in a virtual tie with 3.9% and 3.5% market shares, respectively.
But the most impressive numbers came in the data protection and recovery segment of the overall storage software market, where EMC racked up revenue growth of 46.6% and CommVault, although it didn’t crack the top six vendors list, increased revenue by an impressive 24.9% in the first quarter vs. the same period a year ago.
For IDC’s full press release and more stats, see “Storage Software Market Delivers Good Growth and Continues Signs of Recovery.”
Monday, April 20, 2009
Q1 the worst ever for VARs
April 20, 2009 – The channel bid adieu to the first quarter of this year with a collective “good riddance.” That’s one takeaway from a recent survey of 51 IT resellers conducted by Robert W. Baird & Co.
How bad was it? In terms of expected revenues vs. actual revenues, 60% of the VARs were below plan, 26% were on plan, and only 14% were above plan. That’s the worst quarter since RW Baird began its quarterly server/storage VAR surveys in Q3 2004. In fact, it was almost twice as bad as the previous worst quarters (Q2 2006 and Q1 2008, when about 32% of the resellers were below plan).
Once again, storage was cited as the strongest IT sector by resellers, with virtualization and data de-duplication cited as the hottest technologies.
It’s tough to predict how VARs will fare in the second quarter. About 43% of the survey respondents expect the market to remain about the same, while 30% are more negative and 16% are more positive (and 11% say it’s too early to tell). On the positive side, many VARs said that, although many purchases were delayed from Q1 to Q2, relatively few purchases were cancelled.
When asked which vendors’ products they expect to sell more of in the next 12 months, VARs cited VMware, NetApp, Data Domain and Cisco as the top four performers, with CommVault and LeftHand rounding out the top six.
When asked about specific vendors in the short term (“How do you perceive the following storage vendors in the next 3 to 6 months?”), Data Domain, NetApp and EMC topped the list, with LeftHand moving into the fourth position from seventh in the previous quarter. (LeftHand was also ranked the most channel friendly vendor, slightly above NetApp.)
Sun ranked consistently low in the survey, and it will be interesting to see how the channel reacts to the Oracle-Sun announcement. I”ll blog about that news as soon as I get done scratching my head.
How bad was it? In terms of expected revenues vs. actual revenues, 60% of the VARs were below plan, 26% were on plan, and only 14% were above plan. That’s the worst quarter since RW Baird began its quarterly server/storage VAR surveys in Q3 2004. In fact, it was almost twice as bad as the previous worst quarters (Q2 2006 and Q1 2008, when about 32% of the resellers were below plan).
Once again, storage was cited as the strongest IT sector by resellers, with virtualization and data de-duplication cited as the hottest technologies.
It’s tough to predict how VARs will fare in the second quarter. About 43% of the survey respondents expect the market to remain about the same, while 30% are more negative and 16% are more positive (and 11% say it’s too early to tell). On the positive side, many VARs said that, although many purchases were delayed from Q1 to Q2, relatively few purchases were cancelled.
When asked which vendors’ products they expect to sell more of in the next 12 months, VARs cited VMware, NetApp, Data Domain and Cisco as the top four performers, with CommVault and LeftHand rounding out the top six.
When asked about specific vendors in the short term (“How do you perceive the following storage vendors in the next 3 to 6 months?”), Data Domain, NetApp and EMC topped the list, with LeftHand moving into the fourth position from seventh in the previous quarter. (LeftHand was also ranked the most channel friendly vendor, slightly above NetApp.)
Sun ranked consistently low in the survey, and it will be interesting to see how the channel reacts to the Oracle-Sun announcement. I”ll blog about that news as soon as I get done scratching my head.
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