Storage Stocks Weather Monday's Selloff

The sector showed only small losses, with some surprise gains

September 18, 2001

2 Min Read
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The storage networking industry remained mostly insulated from Monday's widespread stock market decline, perhaps due to an inevitable heightened awareness of the need for data backup and recovery.

In the first trading since last Tuesday's terrorist attacks on New York and Washington, D.C., most technology and networking stocks were in decline (see Market Reopens, LR Index Hits New Low). Storage networking companies, however, suffered only minor losses, and in some cases they even registed a small gain.

Sector bellwether EMC Corp. (NYSE: EMC) lost only 20 cents per share from its previous closing price, ending the day at $13.75. Other storage-specific companies weathered the day with similar small losses: Brocade Communications Systems Inc. (Nasdaq: BRCD) dropped 17 cents per share to $20.23, Network Appliance Inc. (Nasdaq: NTAP) was down 65 cents to $9.97, and Veritas Software Corp. (Nasdaq: VRTS) was down 85 cents to $23.17. All avoided large declines.

Two tape-library leaders, StorageTek (NYSE: STK) and Advanced Digital Information Corp. (Nasdaq: ADIC), even eked out rare gains on Monday, with StorageTek climbing 51 cents per share to $14.41, while ADIC added 47 cents per share to finish at $11.92.

Wall Street analysts covering the storage industry say that last week's terrorist attacks may spur companies that hadn't yet implemented data storage and backup plans to do so, leading to incremental sales gains in the latter part of the year."Recent events could provide a catalyst for middle market companies to reconsider their capabilities and readiness," say analysts Glenn Hanus and Rich Kugele of Needham & Co., in a special report issued Monday. Though the analysts say the attacks will likely cause some short-term fiscal disruptions, they are keeping their Buy ratings on EMC, Veritas, ADIC and StorageTek.

CIBC World Markets telecommunications analyst James Jungjohann also issued a special report Monday, in which he asserts that storage networking plans will probably become a top priority at many corporations, since "the case for the high reliability of corporate data has never been more painfully brought to the forefront." CIBC maintains its Buy ratings on Brocade as well as on SAN components vendor QLogic Corp. (Nasdaq: QLGC), which lost $1.05 per share Monday to close at $25.78.

- Paul Kapustka, Editor at Large, Byte and Switch

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