CacheFlow (CFLO) 106 3/4 -15: As more big name tech companies scare the market with earnings and revenue warnings, investors are increasingly worrying about such recurring themes as a slowing PC market, dotcom customer spending cuts and exposure the Euro. CFLO shares have plummeted almost 30% in the past five days, and the selling has accelerated today. Bear Stearns issued a note this morning that said Network Appliance (NTAP), which is one of CFLO's main competitors in caching appliances, is engaged in some steep discounting in an effort to win new business. You'll recall that in August, CFLO pronounced themselves the market leader in caching appliances. That market share came at the expense of NTAP, as they reported a 44% sequential decline in caching appliances in their last quarter. NTAP is still dominant in the storage space, but quite a bit of excitement over their prospects was related to their caching business, so the company is aggressively trying to recapture that lost market share through discounting. The efforts by NTAP could and probably will result in some margin squeeze at CFLO as they will probably feel the need to compete with NTAP on price in order to surrender the least amount of market share in a price war. The other cautionary message in the Bear Stearns note is a familiar one, CFLO does have Euro exposure, and they still have another month left in their quarter. Based on past results, we estimate that CFLO derives 17-23% of their sales from Europe. Prior to this week, the shares have had an incredible run, having doubled since the end of June, so it is not too surprising to see such a sharp pullback. However, the long-term picture remains favorable for CFLO and their position in the rapidly expanding caching market. - Matt Gould, Briefing.com
CFLO currently has a market capitalization of over $4 billion!!! someone please show me what in the world makes this co. worth even 1/2 of that valuation...exds+gblx is another worthy competitor, and just today rnwk announced their entry into the space...do you realize that many many many more co.'s will soon be taking their place as well...can you say diminishing margins???
bware of stocks rising on low volume... Institutions will be sellers soon and this overvalued pos will get crushed! Watch what the stock does the next time it trades 1.5 million shares or more...bye, bye!!!
massive institutional selling this morning! call your broker and ask where all the BIG BLOCK trades have hit...each block has been on the bid, and small trades move it back up a little...i'd be getting out now! call someone who understands this message or lose a bundle!!!