back to article Shares tumble at flash-disk array maker Nimble: Time to crack open the all-flash?

It's been a dire third quarter for Nimble, whose latest results fell short of market expectations. Shares dropped by a hefty 31 per cent to $14.15 as the news was absorbed by investors. Despite year-on-year growth was still positive. Compared with the year-ago Q3's $59.1m, this year's equivalent showed a 36.5 per cent uplift. …

Anonymous Coward

Meh, it's a blip. Poor forecasting at worst. The market is always fickle. Nimble is good tin with superb analytics.

Better cash, lower debt and 37% up on last year. Not bad under this competitive landscape; NetApp posted more shrinkage in its figures revealed the day before.

I'm not concerned, let's not over egg the disaster cake just yet.

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So losing $100 million dollars a year is all fine and dandy?

I guess it's what all these companies are doing now-a-days.

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Anonymous Coward

Yes, when the company is n this stage of its history, it's not only normal, it's to be expected.

Only joined joined the IT industry have we?

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Perception is reality

I'm sorry but losing 50% of your market cap overnight is not just a blip. There have been plenty of companies that have "good tin" that don't make it because of their financials.

I'm very interested to see how they rebound here, but to just shrug your shoulders and say "no big deal" is ludicrous.

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Anonymous Coward

Re: Perception is reality

Yep the market is twitchy, for sure. The growth is still good though.

Can Nimble grow itself out of this set back? I think they can.

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Anonymous Coward

Re: Perception is reality

I have to agree with the "not just a blip" comment. After yesterday's disastrous Q3 earnings announcement, I find myself looking back at a few data points over the last few years and I've come to the conclusion that Nimble has made the wrong strategic decisions, and that this isn't just a "blip".

Here are the items that raise a red flag to me:

1. Nimble spent time developing scale-out, which I think turned out to be little more than a check-box item, and perhaps just something they could pride themselves on and say, "Look what we did!", but it wasn't a revenue driver.

2. They developed Fibre Channel, which I do think is needed to penetrate enterprise accounts, but hasn't had the revenue ramp I would have expected. I think other investments would have been more prudent (all-flash array).

3. The VP of Sales fiasco from earlier this year. No matter what the real issue was for that, I still place that FUBAR squarely at the feet of the exec team, and Suresh in particular. They made a wrong strategic decision regarding the person to head up the revenue generating arm of the company. To me, that's inexcusable.

I think instead of spending (wasting?) all that time and money developing scale-out and Fibre Channel, they should have predicted the need for an all-flash array sooner and been developing that instead so they could be on the leading edge. Now, they're just going to be an also-ran. When they come out with an all-flash array, it's going to be more of "Who cares?" because everybody else already has one. I'm not saying all-flash would be the end-all be-all for a storage company. I just saying I think it would have been a better investment in time and money than the things they chose to develop instead.

Taken individually, any of these items might be insignificant. But when I look at them as a whole, and at different points along Nimble's recent history, it leads me to one conclusion as an investor (and this is just my opinion)... Nimble's executive team is not capable of making the correct strategic decisions to grow the company. And this is backed up by the disastrous earnings announcement and loss of almost 50% of their market cap.

Because of this, I think it's time for Nimble's board to take a cold hard look at the performance of the entire executive team, and be prepared to clean house. I think Nimble needs new leadership, and I hope the board is open-minded enough to replace the exec team if they agree also.

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Re: Perception is reality

So let me see, they missed by 7-8%, they grew by 35-36% YoY, they acquired some 600 new customers and yet they lost 50% of their market cap when by comparison the entire storage market sucks and EMC and NetApp have been supporting their stocks with multi-year, multi-billion dollar buy backs, IBM has been on a land-slide, and HP has barely staying above ground.

How sound is your reasoning in the above context?

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Oh joy. Analytics for your storage array. That's why people buy flash! Not.

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A good tech pickup

A missed quarter doesn't make a trend but it'll be interesting to see how they follow thru. Their products margins are still very healthy relative to their larger competitors and they still grew, albeit at a smaller clip than previously, when their competitors are losing ground. They have a good kit, Nimble, but competition is tough and the market is fickle. I wish them well. I believe they are a good acquisition target

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Anonymous Coward

The people who matter have already made their money from Nimble.

Its like the difference between being at a concert, and being in a stadium with a bunch of other people staring at each other. The band is gone. Their contract said that they get paid as long as their bus just drives through the parking lot. They never uncased their instruments.

But hey, you get to keep the T-shirt you bought for $50.

I'd take out an equity loan on your house and buy Pure if you enjoyed the show.

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Silver badge
Meh

Enterprise

From an enterprise buyer's perspective, Nimble doesn't have a great USP. You'd think "high performance at a low price with good support" would be sufficient, but it's not enough to invoke a shift from an incumbent vendor, especially when the incumbent will probably offer massive discounts to prevent the shift in the first place. Say what you will about the inadequacies of the major storage vendors (and I can say a lot), but this sort of financial uncertainty doesn't inspire confidence; enterprises crave stability above all else, both in the technology itself and in the company.

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Re: Enterprise

What financial uncertainty are referring to? They are growing at 35-36% yoy and they have no debt.

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Re: Enterprise

Ehhh probably the one where there CEO said they were going to be profitable in 2 months (jan 2016)....then posts even bigger losses than expected and says says "whoops, we really meant profitability 2 years from now in 2H 2017).....that financial uncertainty

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Anonymous Coward

Startups and infrastructure don't mix

Tap, tap, tap... Is Pure and Nutanix listening? Most of the infrastructure startups are burning money. There is no unique value any of these are creating that can't be done by the larger companies sooner or later. Look back at history - the successful infrastructure startups all got acquired by a larger company. IPO's are a good exit for the VC's but not for the life of these startups. History is repeating itself.

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Anonymous Coward

Re: Startups and infrastructure don't mix

and the unique value of the larger vendor is...being large and charge a ton right Mr large vendor?

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Anonymous Coward

Put It In Context

Missing on expectations is a miss, but cash positive YTD, >30% YnY revenue growth and > 600 new customers in the quarter, others would be over the moon. I wonder how many new customers Pure will report in a few weeks. In the short term the stock market is not rational but responds to what Keynes called 'animal spirits'. Having executed exceptionally well since IPO IMO the market has over reacted. Time will tell, but 2016 promises to be a very interesting year in storage and I thought it be dull forever.

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need innovation to survive a fixed market

SAN is not a growing market, the storage growth is in Hyper-converged, BigData, Public Clouds, Object, Data-aware, etc. All-flash, Hybrid, Legacy SAN all fight for the same $$, and customers are not willing to pay the same margins so its even less $$.

to stand out in such a market you need major differentiation i.e. a 5-10x better at something, between all the SAN vendors its a wash, slightly better RAID protection, some better UI/Config tools, a better feature here or there, 30% faster perf .. how much can you re-invent in an array?

Nimble started with some pretty cool and differentiated ideas like cloud based support, app profile optimization (which for some reason is now toned down in the materials, maybe it didn't work?), reduced cost and decent perf with Hybrid, Etc. but everyone copy their InfoSight, and with those small arrays (<100TB) the price difference between Flash and HDD becomes meaningless, especially as SSD is 5x cheaper and denser than few years ago when they started.

So they invest in "brute-force" sales (loaners, dinners, leasing gear, .. ), not innovation and radical new features, which is why they loose so much money, not sure if there is a way out of it, and i believe its going to rain on some of the other players in this category just like it does on EMC and IBM, simply a matter of time.

so back to basic, either be in a new fast growing market, or do things 10x better, best if you can do both :)

Yaron

SDSBlog.com

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Anonymous Coward

Re: need innovation to survive a fixed market

"Hyper-converged, BigData, Public Clouds, Object, Data-aware, etc. " all those buzz words like xxxshit. Nutanix's storage performance proved nothing --- no serious Enterprise will consider that.

BigData --- a lot of people are talking; no people knows what they are talking. Public Cloud -- 17% of the whole IT, Private Cloud about 50%, Hybrid Cloud 9% from recent Garner or IDC data. Object, Data-aware, nobody even know what they mean.

Server storage is being widely used in low end. Dedicated storage array is shrinking. That's why EMC is being sold thought it still not only the biggest storage vendor, also the most reliable compared to those over-promise, under-delivered startups.

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Canary In The Coalmine

This and the Pure IPO spell the death for additional storage and hyper-converged companies from ever going public. The VCs will stop funding these companies and many of them will slowly wither and die away. Nimble, Violin, Tintri, Tegile, SolidFire, Qumulo, Pure, Nutanix, Simplvity (I'm probably forgetting some). They won't be acquired and they can't merge together.

There's a bubble in the storage startup market and it just burst.

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Anonymous Coward

Re: Canary In The Coalmine

36% YOY growth and >600 net new customers in a market where the "dinosaur" storage vendors are mostly losing share (at best, just about holding share) does not indicate that a bubble has burst. But I agree with your sentiments that this (coupled with Pure's weak IPO) does make life a lot harder for the the plethora of smaller startups fighting to survive, where they may not have 600 customers in their entire install base.

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Anonymous Coward

Re: Canary In The Coalmine

I think the concern is though that 36% yoy with their growth also declining isnt going to make them a big player anytime soon or even medium term. Shareholders want a return and adding 600 customers sounds good but how big are those deals? They need to break into the enterprise space and their growth needs to pick up. In my view they had momentum but have dropped the ball a bit on flash (you could argue customers dont need it, but they want it). They are surrounded by others with arguably a better or very similar product (tintri, Tegile) then you have pure and nutanix. With so much going to cloud I dont think id feel too comfortable at a storage vendor right now unless they had some real differentiated IP.

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Anonymous Coward

Re: Canary In The Coalmine

Agreed. There are definitely too many storage companies out there chasing a declining market. I didn't used to be a believer in "the cloud" but in thinking about it more, how many systems really need the performance or security of a local data center presence? I bet 80% of the systems that most companies host could be moved to the cloud, which frees up capital, headcount, and makes expenses more predictable.

If I were running a company, I'd probably move all that crap to a cloud provider, and just keep the most critical or performance intensive systems locally. Then what need would I have for a storage array vendor? Very little.

Nimble is at least sitting on some cash reserves. But I'm not sure about Tegile and Tintri. My gut tells me investors are going to start sitting on the sidelines to see how this storage mess turns out, who the long-term players are, and that Tegile and Tintri have seen the last of their funding rounds. Time to sink or swim now. That goes for all of them.

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