Sharing investment analysts' views on storage shares

Here is a different insight into the fortunes of storage suppliers, the publicly traded ones at least. It is a set of recently published computer hardware and storage commentaries from Baird, a US firm providing investor advice on publicly traded storage concerns.

1) Seagate Technology (STX) - Reducing Price Target; Maintain Neutral Rating - October 24, 2005

We are reducing our price target to $18 from $21, based on 5x EV/C06E EBITDA and 10x C06E EPS, following a challenging CQ3 and uncertain outlook, particularly in enterprise.

Baird commentary here.

2) Hewlett-Packard Company (HPQ) - Competitor Lexmark Disappoints; Maintain Neutral Rating – October 25, 2005

Maintain Neutral rating following weak Q3/disappointing guidance from competitor Lexmark (Dell's primary printing supplier.) We believe Lexmark's results may raise questions over printing market robustness, HP's core segment (~30% of revenue and majority of profits tied to printing.) We expect operational and execution improvements driven by new management should help sustain EPS gains, but HP's turnaround will likely take several years. We'd be a more aggressive buyer in the mid-20s.

Baird commentary here.

3) Dell Inc. (DELL) - Implications from LXK's Negative Q3 Results/Q4 Guidance – October 25, 2005

Maintain Neutral rating following LXK's (Dell's primary printing supplier) negative Q3 results and Q4 guidance. Although the near-term outlook is mixed, in our view, Dell is well positioned in the industry, and we believe investors with longer-term horizons should view Dell as a core holding. We continue to be modestly concerned with forward EPS, but would treat further weakness as a buying opportunity.

Baird commentary here.

4) EMC Corporation (EMC) - Acquires Small ECM Firm; Maintain Outperform Rating – October 26, 2005

We maintain our Outperform rating on the shares of EMC following the acquisition of privately held Acartus Inc. for an undisclosed amount (we believe <$50 million). The acquisition modestly broadens EMC's portfolio in document imaging and is consistent with EMC's software strategy.

Baird commentary here.

5) Maxtor Corporation (MXO) - Execution Challenges/Weak Q3 Results; Downgrading to Neutral - October 27, 2005

We are downgrading the shares of MXO following a difficult Q3 and reduced Q4 outlook due to continuing operational challenges, struggles in high-capacity desktop, and difficult upcoming product transitions. Although we suspect downside on the stock is somewhat limited, with losses in the seasonally strongest half of the year and few catalysts for 1H06, we suggest investors take a more cautious view of the shares.

Baird commentary here.

6) Dot Hill Systems Corp. (HILL) - Better Q3 but Disappointing Guidance; Maintain Neutral Rating – October 27, 2005

We maintain our Neutral rating on HILL following slightly better-than-expected Q3 followed by disappointing guidance. Revenue will grow with NTAP ramp, but we expect continued pressure on GM from major OEMs. We could get more constructive pending details concerning product mix, software content, potential GM impact, and clarity on use of cash. We believe current valuation (~11x EV/06E EBITDA), appears appropriate given uncertainty concerning ultimate earnings power.

Baird commentary here.