Network Appliance Shares Drop 11 Percent
Network Appliance Shares Drop 11 Percent
July 13th, 2006: Network Appliance stumbles despite the news its one of the top four storage vendors.
Network Appliance’s share price slid by nearly 11 percent yesterday. The fall occurred despite recent news the company had become one of the 4 top storage vendors after impressive growth last year. Analysts are concerned by rising product inventories, potentially disappointing sales in Europe and the U.S., and increased competition from rival Sun Microsystems.
On Tuesday the company announced growth was an impressive 42.3 percent according to a Gartner report (Market Share: Storage Management Software, Worldwide, 2005). This was well ahead of the total market for new license revenue in 2004 to 2005 which grew at a rate of 8.8%. Mark Heers, Director, Marketing and Alliances at Network Appliance Australia said, “I think this shows a trend not just of people buying data storage but protecting storage and security. With information becoming more and more important people are looking at these types of solutions and I think we can expect the data protect market to continue strongly”.
Despite the positive news for the company analysts are not so certain about its future. One, Kaufman Bros. analyst Shebly Seyrafi said in a note to clients, “We are getting concerned about Network Appliance's near-term stock depreciation risk for a variety of reasons”. Seyrafi and other analysts are concerned that Network Applications shares are trading at a heavy premium to those of its larger rival EMC Corp, increasing the risk of a decline. The company declined to comment on its share price.