University of California at Davis
Santa Clara University
. Dean has been covering the computer storage and equipment industry at
Salomon Smith Barney
since 1989. From 1984 to 1989 he was director of technology research at
. Prior to that Dean worked at
for 16 years in a variety of sales, marketing and product development positions.
Industry Outlook and Style
Dean predicts continuing robust demand for storage systems and says he uses a doubling of storage under management every year as a guideline. While storage has benefited in recent years from Internet start-ups and Y2K compliance, the main drivers of the current trend, he observes, are those traditional companies that are "dot-comming" themselves or beginning to use the Internet as a delivery channel. He expects this growth to continue for several years, as it takes time for a company to "re-architecture" its IT infrastructure, he notes.
Like most analysts covering this segment of the sector, Dean favors
The Salomon analyst is less optimistic about the disk-drive and component companies, however. He asserts that 75% of disk-drive units are made for the traditional desktop, which has reached a saturation point in the market, he believes. He also notes that there has been no "killer application" to drive PC demand.
The company Dean thinks is best positioned in this industry is
because it makes high-end drives to go into storage subsystems. Seagate announced in March that it plans to go private, so there's not much of an investment opportunity, he says.
Dean also lacks enthusiasm about the component space. While acknowledging that most of these companies are doing better now than they had been, he observes that this is largely due to cost-cutting, downsizing and mergers taking some capacity out of the market. "You'd rather know that it's not just cost-cutting that has helped them get where they are but a surge in revenue and a surge in demand -- that's not a particularly exciting way to play technology at this point in the cycle." The one component stock he mentions is
, which he rates an "accumulate." Dean notes that management's talk of expanding into the optical components business has generated some excitement on the part of investors.
Favorite stock for next 12 months:
"We like the breadth of their product line an awful lot. They play in all sectors, whether it's network-attached storage with filters, or whether it's storage area networks or traditional storage. We expect them to continue to participate in the broader storage industry. In a technology portfolio, you have to own EMC."
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