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StorageTek

Can longtime mainframe tape player become a leader in the SAN revolution?

A mainstay in the mainframe storage business, StorageTek (NYSE: STK) is trying to join the race to storage area networks but it seems stuck in first gear.

Though there are signs of late that StorageTek is getting its fiscal and organizational house in order, the company's background and a slow pattern of sales growth have kept financial analysts sitting on the fence. With five Hold ratings and only two Buys from analysts covering the firm, Wall Street seems to be taking a wait-and-see on StorageTek, whose share price has lingered in the low teens most of this year.

Still, the momentum is at least forward, a direction that's welcome for investors in the Louisville, Colo.-based maker of storage systems, primarily high-end tape and disk drives. StorageTek, which has seen numerous financial ups and downs since its inception in 1969 (including a visit to Chapter 11 bankruptcy in 1984), is trying to move away from its mainframe storage roots and join the SAN revolution, with new network-centered gear and alliances with a wide range of SAN players, including Veritas Software Corp. (Nasdaq: VRTS), McData Corp. (Nasdaq: MCDT), and Network Appliance Inc. (Nasdaq: NTAP), to name a few.

StorageTek isn't a newcomer to the SAN game, having introduced a series of network-based products several years ago. This past October, the company started shipping its StorageNet 6000 "storage domain manager," a kind of hybrid switch/server that allows users to share pools of tape drives across a network of heterogenous host machines, running different operating systems and different backup programs. The SN 6000, StorageTek says, can support either 16, 32, or 64 Fibre Channel I/O ports, and can work with hosts running Windows NT or Unix.

Brad Stamas, director of storage domain management at StorageTek, says the SAN products were a natural evolution, as enterprise use of different servers and data types mushroomed.

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