Bert Hochfeld has just posted a deep dive into an internet storage company: NTAP, which sounds awfully bullish to me. It appears to be serving a growing need for the storage of the massive amounts of information companies are seeking.
The price has spiked this week, but is still very undervalued according to Bert.
Even Hochfeld seems pessimistic about growth hitting 10%. He just thinks it’s not going to be as bad as it has been.
Having worked in the Data Storage industry for a few years, I know a bit about Netapp and its business (indeed I worked with many ex-NetAppers). The shift to flash and cloud should not have been a surprise to anyone. A lot of smart people left companies like NetApp and EMC in 2012 and 2013 to go to startups like Tintri and Nimble.
Maybe one shouldn’t be as pessimistic about NetApp as the market currently thinks, but it’s not rocketing anywhere any time soon. To me it seems that the reward is too low for the risk.
I made a ten bagger off of NTAP in the day. But things change. The Cloud is here, the Cloud works, the Cloud is the future.
I dumped my server, and have found the freedom of the Cloud. Yeah, there are pains. It is not as fast, it spins sometimes, you have to hit refresh from time to time, and it does not have all the options of software on your desktop or your own server. But you know what, SO WHAT!
I no longer have to worry about servers breaking down, backing things up. Annual outrageous software licenses and maintenance fees. I can put a new employee on the software by adding a new login and paying a small additional monthly fee.
I can also use any device, anywhere (yes, I did have my own virtual cloud that could do that with Citrix for example, but it still had all the own your own server issues. Did I mention security?).
Go with the Cloud.
There is a recent thread here regarding where to put new money. Few people listened to me (and that is wise) but Twilio nearly quadrupled in the last few weeks, and Shopify is still undervalued on the basis of recent very comparable M & A activity, not to mention market dominance (this latter aspect can change of course, but a discussion on Shopify is another thread).
Go with the Cloud. It is a long-term platform change that will produce some great winners, including Salesforce (already a huge winner).
If NTAP loses with the cloud, then go elsewhere. I make no comment in regard, as I have not followed NTAP in the last few years. But that is where I would look. Does NTAP provide compelling value to the cloud that is beyond commodity value.
Even Hochfeld … just thinks it’s not going to be as bad as it has been… To me it seems that the reward is too low for the risk.
I didn’t read the whole article but I kind of agree with Smorgasbord. Investing in NetApp is hoping for a turnaround, not a growth stock. I saw that Bert is long the stock, but he probably follows it closely enough to be nimble and get out when needed. I wouldn’t be able to accomplish that.
Matt, I like quite a few Cloud companies. Bought Twilio at the IPO, and I bought SHOP. I have no great insight in regard (except perhaps on Twilio I suppose) that has not been expressed here or on NPI or Rule Breakers.
I’ve been out of the market for awhile doing other things but slowly stepped back in. Seems I still “got it” as Twilio demonstrates. But “having it” is exhausting.
What I want is to buy and hold a few great companies and simply drop money in each month without having to think much about it, so I am purposefully using a narrow focus so I don’t have to think so much on the issue.
Salesforce dominates. History tells us as long as they have new markets and green fields to open up and don’t have Gorillas to fight, they will continue doing so.
VEEV is awfully impressive. Dang, they took over an entire huge market vertical from incumbents in a matter of a few years and now we are talking have they saturated their vertical? Can they still grow? Or will they Siebel out? 20% growth or so is anticipated by the market. VEEV could really surprise to the upside here. Would not bet against this management team.
SHOP appears to me to still be undervalued. TWLO overvalued.
Then there is the Peoplesoft reboot company who did it again, just because they could, but this time in the cloud WDAY.
Okay I am also fascinated with ZEN.
Each company has the opportunity to be really big and great. I’m simply applying patience, trying not to get sucked into the anxiety causing daily news that mostly is irrelevant, and just follow the businesses, enjoy myself, and have patience and not watch the market every day and get sucked into that insanity.
The biggest cloud issue that bothers me is the same issue that bothers me about putting anything on the Internet: security. The news today told of hackers breaking into state election records stored - where? On the Internet. Because I worked on the 2010 Census for the federal government, and once applied for another job online, my personnel record, containing fingerprints, SSN, etc., was swiped by hackers.
As for security issues, you will be backing up your data on the internet anyways (most likely). If you do not, then you will need to do internal backups, that increase IT expenses and points of failure.
If you are small enough, nobody will care, and they probably won’t try to hack you. However, if you are small, the relative cost of managing this IT will be more expensive than it will be for a larger firm. And a larger firm is more likely to be the target of a hacker, thereby needing to provide their own security.
Who is better able to secure your data? Yourself? Your IT consultant (see Clinton server)? or Microsoft or Amazon?
Obviously, absent some really good people, or great expertise, all of which is expensive, it is Microsoft or Amazon that can better secure your data.
If you want better security than this, you need to spend a lot of money on your security, with a custom system and great expertise, and even at that, the security measures will probably make your system impractical to use.
Security is a big issue, but reality is that Microsoft and Amazon and Google are better suited to provide this security. Local election databases are not being secured by any of those entities, but by government contractors for local counties.
Everyone was hacked here. Some inconvenience. But hack quickly discovered and customer data was safe.
Anyone can be hacked, but not everyone can be this competent in discovering and countermeasuring a hack.
My data is much more secure with Azure (which actually it is, with my own bifurcated and separate partition that does not share data outside of my private partition) than on my home brew server with local IT support and commercial backup services.
The issue has possibly less to do with the quality of the security, than it has to do with the nature of the target. A small company with a local system is probably not at a huge risk unless someone decides to target them, like an unhappy client or foe. Moving that to the cloud probably provides better actual security, but the main point is that the target is mostly uninteresting. Most of the security breaches are of very conspicuous, large company or organizations. And, frankly, in many cases the security on them leaves a lot to be desired.