Dec. 30, 2013, 7:46 PM
- As part of its major Domain 2.0 infrastructure project, AT&T (T) has sent a request for information (RFI) to equipment suppliers asking them to submit ideas and architectures that support software-defined networking (SDN) - the shifting of network intelligence to software-based controllers that interact with switches/routers.
- MKM's Michael Genovese predicts AT&T's RFI will likely "have significant long-term consequences" for the telecom equipment industry. He sees the impact being "most negative" for Cisco (CSCO), and a positive for Ciena (CIEN), F5 (FFIV), Finisar (FNSR), and early data center SDN software leader VMware (VMW, EMC)
- AT&T, like others, is enthusiastic about SDN's potential to lower management costs, improve network efficiency, speed the provisioning of new services, and allow "white box" switches/routers to take the place of proprietary hardware.
- The last feature has many Cisco investors nervous, given its potential to increase competition and pressure margins. John Chambers has declared white box hardware (already embraced by many Web/cloud companies) to be a major long-term threat.
- Cisco is counting on its powerful Insieme hardware/software and ACI architecture (meant to adapt to the needs of apps/services) to help neutralize the SDN threat. But Genovese thinks ACI "seems too complex and proprietary compared to more white box-oriented architectures."
- Regarding VMware, Genovese believes the company's NSX platform (combines SDN with other features) has "a strong chance of being selected as the Data Center virtualization platform." Strong uptake is expected for NSX, which has won the support of many Cisco rivals, starting in 2015. Major carrier SDN adoption is expected to arrive later.
Dec. 23, 2013, 6:16 PM
- Reuters reports the NSA "arranged a secret $10 million contract" with EMC's RSA security hardware/software unit with the goal of creating an encryption backdoor that wound up being distributed via RSA's Bsafe cryptography libraries.
- RSA denies entering into a secret contract, and says its "explicit goal has always been to strengthen commercial and government security." But the company doesn't deny taking money from the NSA. GigaOm: "So who’s telling the truth here? Potentially everyone (barring the NSA, of course)."
- Several current/former RSA employees tell Reuters the company was misled by the government, which portrayed the random number-generation algorithm featuring the backdoor as a "secure technological advance." RSA urged its clients to stop using the algorithm in September, after the first reports of a backdoor emerged.
- RSA has been a bright spot for EMC as the company deals with slumping storage hardware demand. RSA's sales rose 11% Y/Y in Q3 to $250M.
Dec. 19, 2013, 2:15 PM
- A number of enterprise IT hardware names are moving higher on a slightly down day for the Nasdaq after Oracle provided better-than-expected numbers for its long-struggling hardware unit.
- After falling 14% Y/Y in the August quarter and badly missing estimates,, Oracle's hardware product sales only fell 3% in the November quarter, a decline that's favorable to a guidance midpoint of -6%. In addition, Oracle has set an FQ3 guidance range for the business of -2% to +8%.
- H-P (HPQ +2.4%), EMC (EMC +1.7%), NetApp (NTAP +1.3%), SGI (SGI +2.1%), Cray (CRAY +1.5%), Fusion-io (FIO +1.9%), and newly-public Nimble Storage (NMBL +1.8%) are among the companies rallying.
- Mellanox (MLNX +5.5%), which supplies InfiniBand hardware for Oracle's engineered systems (now 30% of hardware product revenue), is up sharply.
Dec. 13, 2013, 9:03 AM
Dec. 9, 2013, 10:55 AM
- QLogic (QLGC +0.2%) has hired Prasad Rampalli, until now EMC's cross-business-unit engineering chief, to be its new CEO, effective Feb. 3. (PR)
- Rampalli has been with EMC for three years. Before that, he spent 27 years at Intel in various positions.
- News of Rampalli's hiring comes seven months after the resignation of Simon Biddiscombe, QLogic's last full-time CEO. CFO Jean Hu has been serving as interim CEO since then.
Nov. 25, 2013, 4:03 PM
- The most popular shorts according to Goldman's Hedge Fund Monitor which analyzes the positions of 783 funds with $1.6T in assets (in reverse order, i.e. the last in this list is the most heavily shorted): SYY, KO, TGT, BMY, SNDK, UPS, SLB, GE, CVX, PFE, CAT, COP, EMC, PG, NFLX, WMT, JNJ, DIS, CRM, VZ, IBM, XOM, T, GILD, INTC.
- A quick scan finds Netflix making both the top 25 list of most heavily shorted and the top 20 list of most concentrated longs. List of 20 longs is here.
Oct. 22, 2013, 11:26 AM
- Seagate (STX -1.8%), Fusion-io (FIO -5.3%), and OCZ (OCZ -5.7%) have joined NetApp (previous) in selling off following EMC's (EMC -3.7%) Q3 miss.
- The storage giant's mainstay Information Storage unit saw a slight Y/Y drop in product sales, as 66% growth in flash and scale-out storage sales failed to offset an 8% Y/Y drop for high-end storage, a mere 3% increase in mid-range and backup/recovery hardware, and a 6% drop for other storage products.
- EMC's numbers follow a Q2 for which IDC estimated total disk storage systems sales fell 5% Y/Y, and external disk storage sales dropped 0.8%. EMC was assigned a 24.2% share of the former market (+170 bps Y/Y), and a 31.3% share of the latter (+90 bps).
- EMC blames its Q3 issues on U.S. federal demand; the company isn't alone in seeing federal weakness. However, both server and storage hardware sales have been pressured by the adoption of commodity/white-label hardware (generally using cheaper hard drives) by Internet giants and cloud infrastructure providers such as Google, Facebook, and Amazon.
Oct. 22, 2013, 9:36 AM
- Even as 80%-owned VMware flies higher thanks to its Q3 beat and guidance/CC remarks, EMC (EMC -4.8%) is lower after missing Q3 estimates thanks to a rough quarter for its core storage business. Full-year EPS guidance has been lowered to $1.80 from $1.85 (consensus is $1.86). NetApp (NTAP -2.2%) is off in sympathy.
- EMC's core Information Storage unit had 1% Y/Y sales growth vs. 4% in Q2. Product sales were down slightly, services +3%. While emerging storage sales (inc. Isilon, Atmos, flash storage) rose 66% Y/Y to $380M, high-end storage sales (Symmetrix) -8% to $1.05B, unified & backup/recovery (inc. mid-range hardware) +3% to $1.47B, other storage -6% to $880M.
- The RSA security unit was a bright spot, sales +11% to $250M. EMC and VMware's Pivotal spinoff, set to go public, had revenue of $80M (+21% Y/Y).
- Thanks in part to VMware, North American sales +3%, EMEA +8%, Asia-Pac +8%, Latin America +13%. EPS was boosted by $1B in buybacks. Gross margin was 63.9%, -20 bps Y/Y.
- A major question likely on investors' minds: how much of the storage weakness is due to a demand shift towards cloud infrastructure providers and Internet giants relying on some combo of commodity and flash hardware?
- Q3 results, PR, slides
Oct. 22, 2013, 7:13 AM
Oct. 22, 2013, 12:05 AM
Oct. 21, 2013, 5:49 PM
- VMware (VMW) guides on its Q3 CC for Q4 revenue of $1.45B-$1.48B, largely below a $1.48B consensus. However, license growth is expected to remain healthy, rising 12%-16% Y/Y after accelerating to 15% in Q3
- In addition, VMware now expects 2013 operating cash flow of $2.3B-$2.5B vs. prior guidance of $2.1B-$2.35B.
- The company does expect its Q1 2014 Q/Q revenue and license revenue drops to be 100 bps greater than the drop it saw in Q1 2013. However, full-year revenue is still expected to grow 15% Y/Y vs. a 14.5% consensus.
- VMware also mentioned its bookings were strong in all three major geographies, including Asia-Pac, where peers have stumbled. Costly enterprise license agreements (ELAs) now account for 1/3 of total bookings, and over 40% of bookings involved something besides standalone vSphere licenses, up from 35% in Q2 and 30% a year ago.
- End-user computing (PC virtualization, mobile software) bookings fell slightly Y/Y after rising at a mid-teens rate in Q2. That could be a sign Citrix's (CTXS) troubles are due to broader demand weakness.
- VMW now +8.3% AH. IBM and Citrix had led investors to expect bad news. EMC +4.5%. JPMorgan's upgrade was well-timed.
- Q3 results, details
Oct. 21, 2013, 5:30 PM
Oct. 21, 2013, 4:21 PM
- VMware's (VMW) Q3 license revenue (drives future services revenue) rose 15% Y/Y to $564M. That's well above Q2's 2.6% growth, and also guidance for 9%-13% growth. Services revenue +13% to $725M.
- Total revenue growth was 14%, or 19% if excluding assets that were either sold or are part of the Pivotal spinoff. VMware's unearned revenue balance rose 21% Y/Y to $3.64B. That's one reason free cash flow rose 50% Y/Y to $543M, easily surpassing net income of $261M.
- R&D spend only rose 2% Y/Y to $266M, thanks to restructuring moves. Sales/marketing +9% to $449M.
- Guidance will be provided on the CC (starts at 5PM ET).
- VMW +4% AH. EMC also +4%. EMC reports tomorrow morning.
- Q3 results, PR
Oct. 18, 2013, 4:22 PM
- JPMorgan's John DiFucci, who upgraded VMware (VMW +3.4%) to Overweight this morning, observes the percentage of x86 server CPU capacity being used to power virtualized servers (34%) is well below the percentage of x86 server workloads that have been virtualized (75%).
- While the latter figure (or similar ones) has been used to back up arguments the virtualization software market has become saturated, the former one is arguably more relevant to VMware, given the company charges for its mainstay vSphere virtualization platform on a per-CPU basis.
- VMware shares were pressured earlier this year in large part due to concerns about slowing vSphere license growth. Aside from saturation, investors have also been on edge about share losses to Microsoft's Hyper-V (recently declared by Microsoft to be growing 3x as fast as vSphere).
- Both VMware and parent EMC (EMC +1.9%) got a lift from the upgrade. VMware shares remain down 14% YTD going into Monday's Q3 report.
Oct. 18, 2013, 1:36 PM
- Nimble Storage, a provider of hybrid storage appliances that pair flash memory and hard drives, has made good on rumors by filing for a $150M IPO under the symbol NMBL. Goldman, Morgan Stanley, Pac Crest, William Blair, Stifel, Oppenheimer, and Needham are underwriting. (S-1)
- Nimble asserts its CASL architecture, built to address hybrid appliance needs, offers better performance than traditional systems that offer flash as a caching option (e.g. EMC's VNX, NetApp's (NTAP) FAS line). CASL is also said to support the independent scaling of storage performance and capacity.
- Nimble had revenue of $50.6M in the six months ending July 31, +164% Y/Y. Net loss totaled $19.7M, thanks to 100%+ increases in sales/marketing ($31.4M) and R&D ($14.4M) spend. Nimble had 1,750+ cumulative customers as of July, up over 3x Y/Y, and 600+ resellers.
- Competition is provided both from incumbents such as EMC, NetApp, H-P, Cisco, and IBM, many of whom have been busy acquiring flash startups, and from smaller firms such as Fusion-io (FIO +2.3%), Violin Memory (VMEM +0.8%), and Nimbus Storage. Violin, which is seeing slower growth and much bigger losses than Nimble, recently turned in a disappointing IPO. Fusion-io entered the hybrid appliance in April by acquiring NexGen Storage.
Oct. 16, 2013, 7:03 PM
- IBM's $1.07B Q3 revenue miss, caused in large part by a 15% Y/Y drop in Asia-Pac sales and a 17% decline in hardware sales, (including a 40% drop for hardware sales to China), is pressuring several enterprise IT peers a bit in AH trading.
- IBM's numbers come two days after Teradata warned of a major Q3 decline in Asian sales. The hardware figures will likely stoke additional concerns about share losses by IBM and peers to white-label OEMs selling to major Web/cloud service providers.
- HPQ -0.8% AH EMC -0.9%. VMW -0.5%. RHT -0.6%.
EMC vs. ETF Alternatives
EMC Corp supports the businesses and service providers to transform information technology (IT) operations to an as a service model (ITaaS). It operates in three segments: EMC Information Infrastructure, Pivotal and VMware Virtual Infrastructure.
Other News & PR