It’s been a tough year for the data storage industry, but several analysts have reported hopeful signs for the sector in recent weeks.
“We are hearing from our North America sales contacts that enterprise spending in storage has finally started to thaw over the last few weeks, with deal closure rates improving,” Avian Securities storage analyst Matthew Bryson wrote in a research note last week. “This matches commentary we are receiving on the component side, where we are seeing upside demand for enterprise-class drives.”
Bryson also noted that “a portion of those large deals that had been postponed and trimmed over the last few quarters are finally beginning to close.”
As the top data storage hardware and software vendor, EMC (NYSE: EMC) could be one of the chief beneficiaries of any thaw in enterprise storage spending.
Barclays Capital analyst Ben Reitzes upgraded the data storage giant last week, noting that checks with customers and suppliers indicate that demand for EMC’s high-end offerings is stabilizing, and that storage spending should improve before other IT sectors.
Analyst Aaron Rakers of Stifel Nicolaus said his own checks on EMC are “incrementally more positive,” but he cautioned that headwinds remain.
Rakers noted “a bit more optimism with regard to demand trends relative to what we had been hearing earlier in the quarter. Our recent conversations with industry checks provide us with some comfort in potential upside to our current flattish sequential growth estimate for the June quarter, though we are not yet convinced that we can make a meaningful call on the notion that the 2H09 demand trends are going to point to a meaningful recovery.”
Rakers said he sees pricing pressures easing and improved demand for EMC’s Clariion and new Symmetrix V-Max arrays. He also noted an improvement in EMC’s job listings in recent weeks.
EMC is expected to report its quarterly results on July 23, according to Briefing.com.
Other storage vendors that may also be seeing improving market conditions.
Xyratex (NASDAQ: XRTX) reported seeing signs of stability last week, which could be good news for customers NetApp (NASDAQ: NTAP), Dell (NASDAQ: DELL) and IBM (NYSE: IBM).
And Wedbush Morgan analyst Kaushik Roy said his checks with OEMs, VARs and customers suggest that Brocade’s (NASDAQ: BRCD) business may also be stabilizing.
Avian’s Bryson noted “severe shortages in high-capacity enterprise-class SATA drives over the last few weeks, a situation that appears to date back to the late-May time frame.” Fibre Channel drive orders are also improving, as are DDR3-based sever memory modules, he said.
Avian sees NetApp, Brocade, LSI (NYSE: LSI), Compellent (NYSE: CML) and Seagate (NASDAQ: STX) benefitting from the improved outlook for storage spending.
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