I’m not a stock analyst, so don’t do anything stupid on my account
That said I see a lot to like in Isilon’s Q4 results.
Not that their loss widened to $10.4 million, or 72 cents a share, from a year-earlier loss of $4.08 million, or 78 cents a share.
Nor that analysts expected a fourth-quarter revenue of $21.5 million, according to Thomson Financial, while Isilon delivered only $20.7 million. Even $21.5 million is more than double the same quarter last year, but on Wall Street it isn’t how you do, it is how you do against expectations. So the CFO got a little lesson in expectation management.
Especially not that the stock dropped 4.5% on huge volume today. Ouch! I assume the common six month lockup is keeping folks on tenterhooks at Isilon. Don’t blame them. Could mean the difference between a Ferrari or a Porsche. w00t!
What I do like:
Their revenue more than doubled to $20.7 million from $8.7 million. That is about what EMC spends on light bulbs each quarter, but it is real money for a startup.
I also like that Isilon forecast first-quarter revenue of $21 million to $23 million and 2007 revenue of $115 million to $125 million. That is real money too.
Sadly, Wall Street expects first-quarter revenue of $23.6 million and 2007 revenue of $122.7 million. If they don’t meet those expectations the climb down could get ugly.
Isilon expects to reach break even on a net basis and profitability excluding items in the second half of 2007. That is very good news indeed, especially if you’ve bought some of their kit. On the other hand, they haven’t done it yet, and I’ve heard too many of those predictions to put much faith in them.
Best of all
Isilon is validating the storage cluster market. My hat is off to them.
Comments welcome, as always.
nice to see you use the word wOOt in this respect…
i am not sure if your very excited or just refer back to the old meaning “Wow, loot!”
😉
se,
Well, I’d be more excited if it was my loot we were talking about! I haven’t looked at Isilon’s SEC filings, yet I expect that some of that $1.4B is finding its way over to Phil Smart, the local Mercedes dealer.
As for the definition of w00t! I went looking around the web for one and, oddly enough found the most satisfying discussion in a t-shirt description at Think Geek:
Be that as it may, I am excited for the Isilon team – who started at about the same time as YottaYotta, where I used to work, which for several years was the other Seattle-based storage startup – and for the entire next-gen storage business. Their IPO should wake-up skeptical VCs to the fact that storage is a big business ripe for disruption.
Robin
“Isilon is validating the storage cluster market” ???
They are a tiny as yet unprofitable startup with zero market share and evidently a good implementation of a great idea.
I contrast them with Netapp and scratch my head at your assertion Isilon is doing the validating of the storage cluster market. Here we have a Fortune 1000 company growing like crazy compared to others with actual market share. Yes, Netapp gear is pricey and proprietary like all the other players at this point, but they have the established customer support and field reliability numbers to justify it if only against those other current players. If they can internally finish the acquisition and get back to 1 code base across the product line in the next year or so they should have a bright long term.
Kevin,
You make a good point. Reminds me of the ad Data General almost ran when IBM entered the mini-computer market: “They Say IBM’s Entry Into Minicomputers Will Legitimize The Market. The Bastards Say, Welcome”.
I have a particular vision for storage clusters: commodity disks on commodity servers running an open-source OS and, preferably, an open-source storage layer. Just as Sun did yeoman labor in the ’80’s legitimizing Unix for commercial use, only to get mugged by open-source Linux/Unix in the late 90’s, I trust that NetApp is doing good work for storage clusters with their ONTAP GX product line. Yet they run many of the same risks that Sun ran.
Nor am I one to underestimate the power of a global sales and service force. Yet once the concept gets accepted in the data center, then the dynamics change – shifting from architecture risk to vendor risk – which is an easier nut to crack for startups and smaller vendors.
Finally, I am a romantic, and I like the idea of more startups vying for the Next Big Thing, and that means VCs have to see a reason to invest. I hope Isilon is the first of those reasons.
Robin
How could PolyServe not remark 🙂 ?
Isilon technology has commodity inside, but they DO sell iron so there is a bit of a hardware lock-in. Selling iron comes with the understandable margins associated with it. I think that is the tough part about these numbers. I know people at Isilon and this is not mud-slinging, but that 6 months is ticking.
I cringe when I see a public company referred to as a startup…eek, Tech bubble time?
As for NetApp, they do not make clustered storage. They cluster filers, yes, and provide a clustered namespace, but that is not what clustered storage is. They are a pure-vendor lock-in play and one of the things that has got to stop is the phenomenon of customers plopping a FAS down next to an StorageWorks, TotalStorage, XP,DMX or whatever SAN. That model makes no sense. Leverage the SAN, front it with a gateway and have your multiple protocols all taken care of. NetApp technology is good, and so is AS/400. Technology is a constant shape-shifter.
I submit:
http://kevinclosson.wordpress.com/2006/11/10/netapps-ontap-gx-for-oracle-clustered-name-space-a-good-user-group-oswoug/
Finally, I definitely think Isilon is in better shape than IBRIX…