Tuesday, November 14, 2006

Calls of Note Part 4

- Banc of America notes checks indicate Network Appliance (NASDAQ:NTAP) turned in a solid Q (though not quite as strong as last Q), so they are raising their already above Street revenue and EPS estimates to $650M and $0.27 (from $640M and $0.26). Street is $646M and $0.25. TP remains $35, within current valuation framework.

It sounds to like NTAP's existing offerings have all been strong (newer FAS3000 mid-range filers, the Decru security appliance, and expanding services offerings).

The firm doesn't believe the recently released FAS6000 (higher-end systems) have gained
as much momentum as the FAS3000, so could remain a future catalyst. The IBM OEM relationship appears to be progressing, and they believe helped during the Q.

Key drivers for longer-term growth are 1) expansion of IBM relationship in terms of both geographies and products (now includes FAS6000), 2) Decru security product, 3) VTL, which is a new tape product category for NTAP, 4) furthering the SAP relationship, 4) new sales of the high end 6000 product, which mgt cautioned has a long sales cycle, and 5) expansion into small and medium business with products that are appropriate for this market segment.

They also believe NTAP's product strength remains a positive for Buy rated Xyratex, and raised XRTX storage systems revs estimates to reflect this last week.

Notablecalls: Not actionable but good to know category.

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