If you invest in networking, you must read this transcript. Alan Weckel provides a tour de force in discussing switch market growth, events in China, the slowdown in cloud capex, the transition to 400g, and wireless adoption.
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Rodney Brooks is a robotics entrepreneur. He is the Panasonic Professor of Robotics (emeritus) at MIT and founder of Rethink Robotics as well as iRobot Corp. In his blog , he says that if we can’t design autonomous vehicles, then artificial general intelligence (AGI) is a long ways off. And “if AGI is a long way off then we can not say anything sensible today about what promises or threats it might provide as we need to completely re-engineer our world long before it shows up, and when it does show up it will be in a world that we can not yet predict.”
One and done—company thinks guide down is sufficiently conservative. A second consecutive miss on the topline—albeit only a near miss in F1Q—and a downward revision to F20 revenue guidance sent the stock down 17% in the aftermarket. Whereas the prior quarter miss mostly was due to a one-time delay in shipments, the company now recognizes a miss as part of a longer enterprise selling cycle than previously thought.
HPE reports F2Q earnings on Thursday after the close. The company may reiterate its “steady macro environment” comment from last quarter though our VAR checks are pointing to slower server growth (link). Pointnext is most of profit and should decline though at a lesser rate; will orders be up? Revenue could be down 1%, but gross margin may rise on HPE Next Savings. We also look for incremental details on the Cray acquisition announced last Friday, especially around the near-term (F20) EPS impact (link).
Wolfe Research Senior IT Hardware & Networking Analyst, Steve Milunovich, hosted a webcast with Alan Weckel of 650 Group to present a comprehensive slide deck and discuss switching growth rates by the market, including cloud, recent vendor results and outlooks, and what to expect in 400g and 5G.
We show the three- and- twelve- month performance of the 25 largest market caps in our Wolfe Tech Universe. The upper right and lower left quadrants are outperforming and underperforming, respectively, over both periods. Names in the lower right are improving (better over three months) while those in the upper left are losing steam.
Most stocks are up over both timeframes. Services (PayPal, Mastercard, Visa, Accenture), Software (Microsoft, SAP), and Internet (Amazon, Alphabet) are well represented.
Salesforce is the only name losing momentum with a modest decline over three months. Alibaba and Tencent are slightly gaining momentum. A stock’s position is reflected in its technicals—Salesforce is below its 50-day MA.
Resellers say that enterprise spending was especially strong in 2018 and expect less growth this year. Some saw a surge in Dec due to buying ahead of tariff concerns and consequently had a weak Jan. Business has improved in Feb/March and 2Q looks solid. VARs we spoke with are doing well though they pointed out that smaller and non-US resellers may be faring worse. In fact, a large European VAR said it is taking 30-40% more effort to close sales. Spending is best in security followed by hyperconvergence, storage, servers, PCs, and printers.
We surveyed 50 value-added resellers of storage in the US, Europe, and Asia-Pacific. The survey was taken in April, asking about Jan-March business though we may have picked up some April views. Takeaways include (1) the outlook for overall IT spending in 2019 is a bit weaker than indicated last period; (2) storage spending is solid with more Strong than Weak responses and sales on plan; (3) Dell EMC is discounting and not fully recovered, but its sales improvement continues; (4) NetApp is seeing improvement from its Jan hole, but we lower F1Q estimates given the difficult $90mn ELA comparison.
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