Monday, March 17, 2008

Analysts and your strategic storage investment

Uncertainty in the economy is driving many companies to review their costs. Some are focusing on their high cost storage infrastructures, because when things go into recession many companies need to understand why their costs are so high, and where their money is going. Whether the USA is in an officially declared recession, or just a business slowdown, many large NetApp clients are currently experiencing hard times.

Storage is one of many areas within a corporate data infrastructure where costs can be contained. By reviewing the performance requirements of their applications, and creating tiers of storage and support services, IT professionals can contain their cost per TB of managed storage, and even reduce it. Analysts watching the storage industry who are cognizant of the ebb and flow of IT spending know there are short term ways and long term ways of controlling storage infrastructure costs. More than one analyst has noticed that troubles within the financial sector which NetApp's CEO mentioned could have a big effect on NetApp's growth over the next few quarters.

"The company is a leading maker of network storage systems, whose earnings have declined four of the past seven quarters because of poor internal execution."

"Despite the upbeat sales guidance at the analyst meeting earlier this week, the stock was downgraded Wednesday at the brokerage Robert Baird. Given management's guidance for a slow start to the new fiscal year, many investors are wary about management's ability to meet its lofty sales growth target."

"At the end of the day, I believe that readers should continue to avoid NetApp at current levels. Management is trying to transform the company in a difficult domestic economic environment, and I don't believe that the company will be able to achieve its lofty fiscal 2009 targets."

While the market is in flux might be a good time to take a strategic look at your storage vendors' plans for the next few years. Are your vendors aligned with your company's IT road map, plans, and tech refreshes? How will your vendors weather a sudden downturn in the marketplace? How will their new products benefit your company?

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