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Wasn't enterprise storage supposed to be a hot spot? It didn't take long to cool off.

Shares of seven of the major companies in the sector fell an average of 6% Friday, following disappointing earnings by

QLogic

(QLGC)

earlier in the week, and negative reports by sell-side analysts.

Goldman Sachs analyst Laura Conigliaro cut her rating on the enterprise systems and storage sector to cautious from neutral on Friday.

And in a scathing note last week, U.S. Bancorp Piper Jaffray analyst Ashok Kumar took the sector to task for "short-sighted, fiefdom-building strategies." He also said the sector is becoming commoditized.

"Storage has reached the

same point as the aircraft industry, where the basic concept of incredibly complex technology is pretty well understood by the critical mass of players and is destined to be exploited as a commodity for ever after," he wrote. "The key to success is building jets that have a lower cost-per-passenger mile. The storage equation is different, but the end result is similar: The only thing that matters now is lowering the cost per GB of storage. That can only mean one thing for storage companies: lower margins for storage products."

Leading the downward parade was Storage Tek, which ended down $1.50, or 6%, to $23.50. Storage Tek is scheduled to announce fourth-quarter and full-year 2002 results after the close of trading on Jan. 22.

QLogic fell $2.10, or 5.5%, to $36, and

Emulex

(ELX)

was down $1.32, or 6.1%, to $20.19.

EMC

(EMC)

was off 46 cents, or 6.2%, to $6.87;

Brocade

(BRCD)

dropped 45 cents, or 8%, to $5.13;

McData

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was off 12 cents, or 1.4%, to $8.26; and

Veritas Software

(VRTS) - Get Free Report

shed 80 cents, or 4.4%, to $17.47.