Woz had this to say about my colleague John Walker

June 25, 2012

John was the best operations person I ever knew or imagined. He had tight control over his focus no matter how tough the job. When things get busy, John remains even and calm and in control. He is the sort of person I would want to work with or for. He had high integrity and would never distort the truth or significance of his work. As an aside, he accomplished amazing things that were critical to Fusion-io’s success.” June 15, 2012

Steve WozniakChief Scientist, Fusion-io
worked with John W. at Fusion-io


Rising Stars To Watch in 2012: FIO

January 5, 2012

(Motley Fool Repost)

Fusion-io (NYSE: FIO)

Enterprise SSD manufacturer Fusion-io is off to an amazing start so far in 2012, as demand for high-performance storage solutions is on the rise. Fusion-io manufactures and produces high-performance drives that can churn through massive amounts of data at lightning-fast speed, which is certainly appealing to their high-profile customers like Facebook and Apple.

Fusion-io continues to grow at a rapid pace, as their revenues grew from $36M in 2010 to an astounding $199M in 2011. The huge increase in sales speaks volumes to how well Fusion-io’s products are being received in the marketplace. Not only is the company generating a signifigant amount of revenue, they are earning a significant amount of margin as well. Their gross margins (66.1% for Q2) are signifigantly higher than their industry peers SimpleTech (STEC) and OCZ Technology Group (OCZ).

The company is certainly the key player in the Enterprise SSD space and they have the clout to match it. Fusion-io’s braintrust includes technology visionary Steve Wozniak and they continue to add strong engineering talent to their roster. Look for Fusion-io to deliver another strong year of profitable growth in 2012.


Looks For Large Gains From Solid State Drives Storage Wars

January 5, 2012

(Seeking Alpha Repost)

As cloud computing (data centers), smartphones, and tablets continue stratospheric growth rates, the market needs faster, more reliable, and less power-hungry storage options. The digital junk has to be stored somewhere, and these new devices don’t have the storage capabilities of traditional desktop computers loaded with large hard disk drives.

Enter the SSDs, or Solid State Drives (read The SSD Revolution for a good overview of the sector) which provides a better alternative than traditional hard drives, though at a higher cost.

Between analysts raising estimates for Fusion-IO (FIO) and OCZ Technology (OCZ) upping estimates for Q4, the sector has startling growth potential for 2012. Numbers that caught me by surprise.

Fusion-IO is seen as the industry leader and innovator. Not only is the company a recent IPO darling, but Steve Wozniak, co-founder of Apple (AAPL), is the chief scientist, giving the company the instant street credibility that helps with customers and stock valuations.

The company sells plug-in boards that accelerate access to corporate server computers such as those needed in cloud computing operations.

Analysts from Credit Suisse and Morgan Stanley recently upped the estimates for Fusion-IO, even suggesting that new revenue from current and pipeline accounts could double the CY12 revenue estimate of $372M:

Fusion-io is well-positioned to ride the surge in enterprise flash given its leading market share, recent low-cost product introduction (ioDrive2), and growing partnerships / distribution, in our view. Our $30 price target applies an 8x EV/Sales multiple, upper-end of comparable data center peers, to our CY12 revenue estimate of $372M. We believe our estimates are conservative, especially if FIO converts new accounts in its pipeline that have the potential to be multimillion customers. We believe conversion of new revenue in current and pipeline accounts could at least double our CY12 revenue estimate.

Fusion-IO has impressive gross margins in the 50%+ level. The company though trades at lofty multiples. The forward PE clocks in around 70 and the Price/Sales multiple is over 9. The stock is definitely expensive, but if growth accelerates as the analysts think might be possible the stock will end up being cheap. One major caution is that prime customer Facebook could at any point leave it without a major revenue stream.

OCZ Technology is the opposite of Fusion-IO. The company has been around for 10 years and just recently made a move into SSDs. Hence the company remains relatively unknown, even though the revenue growth has been nothing short of spectacular.

Back in December, OCZ guided to higher revenue numbers that amount to 30% sequential increase from Q2 2012 — amounts that exceed those of Fusion-IO by a wide margin. The total fiscal 2012 revenue will now exceed the previously announced top end of $350M. That’s impressive growth for a company that just entered the space a little over a year ago.

The company only trades at roughly 1x those fiscal year 2012 estimates, a far cry from the valuations of Fusion-IO. The one catch with OCZ Tech is that gross margins remain low at just above 21%. Is OCZ undercutting competition by selling their products at low margins? Typically the technology companies that thrive are the ones selling products for premium prices. Once your product becomes a commodity, the stock never makes the high returns desired by investors.

OCZ trades at a very reasonable 12x forward earnings. Any upside to those numbers could result in serious gains for the stock. Investors should focus on whether gross margins move towards the 30%+ range.

Preliminary Highlights

  • OCZ expects revenue for Q3’12 between $100 and $105 million, an increase of approximately 90% compared with the revenue of $53.2 million reported in Q3’11, and an increase of approximately 30% compared with the $78.5 million reported in Q2’12.
  • OCZ now expects revenue for its fiscal year 2012, ending February 29, 2012, to be in excess of the top end of its previously announced range of $320 to $350 million; this does not take into consideration any potential increase in demand for the company’s products arising from the widely reported hard disk drive shortage.
  • “We expect to report record revenue in Q3’12, driven primarily by increased traction for our enterprise and server SSD offerings along with initial shipments of our new PCIe-based offerings,” said Ryan Petersen, CEO of OCZ Technology. “Based on the exit bookings rates from November, interest in these products is exceeding our expectations, due to accelerated adoption of our SSDs by server OEMs and enterprise customers,” he added.

Though listed by some as a market leader in the enterprise flash storage sector, STEC (STEC) appears to be the laggard these days. Not only did the stock plunge back in July when it was revealed that the SEC may recommend a civil injunction against the company, but earnings estimates for Q4’11 and 2012 were lowered dramatically. The 1-2 punch led to a 50% drop in the stock and no ensuing recovery has taken place though the sector is gaining steam. STEC remains a show me stock that should be avoided for now.

The analyst predictions on Fusion-IO and the continued guidance raises by OCZ Technology suggest that investors should take a further look at this sector. The combination of being a cloud computing storage option and fast growth could provide the catalyst for large stock gains.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in OCZ over the next 72 hours.

Additional disclosure: Please consult your financial advisor before making any investment decisions.


Spock and Awe: Woz + Nimoy @ DEMO

January 5, 2012

Fusion-io just posted an update to their blog:

Leonard Nimoy Joining the Woz at DEMO

Leonard Nimoy Joining the Woz at DEMO

Posted: 01/04/2012

 

We’re very excited that the one and only Leonard Nimoy is joining us at DEMO Enterprise this Thursday evening as the special guest of our chief scientist, Steve Wozniak.  The Woz and Leonard Nimoy will each share their thoughts on technology’s past, present and future – it’ll be a kickoff to 2012 not to miss!

If you’re not one of the lucky folks that will be in the audience, you can still watch the event via live stream on VentureBeat.com. Tune in starting at 6:15 pm PT to see all the evening’s exciting innovations as they happen. Live long and prosper!


FOOL REPOST: The 5 Best IPOs of 2011

November 29, 2011

Fusion isn’t just science fiction
Data-storage start-up Fusion-io has been off to a galloping start, even though it fell more than 25% last week from its peak on Nov. 17. Are investors worried that their peers are a little overeager for a company with a triple-digit P/E? The company’s got the Woz on board, but there’s precious little financial history to analyze. Its solid-state solution seems to bechallenging some major players, but don’t forget that computer hardware, especially hard drives, is a brutally competitive industry. There are a lot of questions surrounding this company, but a lot of potential.

Read the entire post here:  MOTLEY FOOL:  The 5 Best IPOs of 2011