Expanded development in both organized and unstructured information is driving interest for information storage. The worldwide information data storage business sector is relied upon to climb at a CAGR of 7.83% over the time of 2012-2016. Looking at this growth, it has opened the doors for various companies to harvest from this growth. Here in the article I have discussed two organizations which are set to have a larger share of this market. Keeping in mind the end goal, these organizations are improving their portfolios through propelling new product launch and major stress on acquisition policies.
Improving top line with procurement and unveiling new products
Sandisk (SNDK) as of late published arrangements to gain control of Smart Storage System, a venture for solid state drive, or SSD, deployed on serial advance technology attachment (SATA), and SAS storage convention, for around $307 million. Smart Storage System’s acquisition will help Sandisk to open doors in the $1.6 billion market of SATA products and will extend its SAS portfolio. This acquisition also empowers SanDisk to establish its authority position in the SSD market. Further, this obtaining will reinforce Sandisk's "NAND streak memory” which will enhance its execution and unwavering quality.
Sandisk has attained the qualification of being an eligible SSD supplier and with shipment of 19 Nanometer MLC-based undertaking SATA SSDs, equipped for supporting 10 full drives writes in a day. It endeavors SATA SSDs to be a solid donor to the revenue in the current fiscal. To continue increasing its earnings and margins, it introduced the world’s fastest 64GB micro SDXC card mainly for 4G smartphones, tablets and action cameras. The growth of high-end smartphones, which require high memory bandwidth, will help SanDisk grow further.
Strongest quarter till date
SanDisk reported strong year-over-year revenue growth of 13% to $1.51 billion in the first quarter. Revenues from commercial and retail channels were strong, aided by higher mobile embedded and SSD sales. This was the strongest first quarter to date for SanDisk Q1 revenue and record Q1 non-GAAP operating margin of 31.5%.
Consensus of analyst estimate the revenue to be around $6.65 billion for the current fiscal and is expected to reach $7.7 billion is next fiscal. EPS is expected to reach $1.62 in the next quarter growth by $0.12 from the current quarter.
Acquisition generating growth opportunities for Fusion-io
To enhance its equipment business, Fusion-io (FIO) acquired Nexgen Storage that pioneers in storage devices for $119 million. Nexgen drive enabled with Fusion-io Memory will serve small- and medium-sized business. The mix of both the organization's products on x86 servers will make hybrid storage that will offer flash storage devices at a lower cost.
This bundled package will boost the system's data writing and reading capacity by up to 250 times, compared to a SSD-based system, and enhance system performance almost by 3 times. It is looking to attract new customers as well as retaining its existing ones by integrating new features into its storage drives. The company expects to deliver year-over-year revenue growth of 21.4% to $525 million in the current fiscal as against 436.3 in the fiscal year ended on June 2013.
Furthermore an online music leader, Spotify, tied up with Fusion-io to supply flash storage disk for its music data centers. Under this, Fusion-io will serve and accelerate the music databases of Spotify with its ioMemory platform. This will help Spotify accelerate delivery of music files from its Apache Cassandra database to its listeners globally. Therefore, Spotify users will be able to access music tracks instantly and increase its footprint globally with new services. The growth of Spotify enables Fusion-io to enhance its gross margin, and adding more big names to its customer base will boost revenue. Fusion-io expects gross margin of around 60% this fiscal year, up from 55.8% last fiscal year.
In the most recently declared quarterly results, Fusion-io reported revenue of $100.5 million for the fiscal third quarter of 2014, compared to $87.7 million for the same quarter of 2013. Net. Gross margin for the fiscal third quarter of 2014 was 51.0%. Operating margin for the fiscal third quarter of 2014 was a negative 30.1%.
With the steep climb in demand for data storage, the organizations in this industry are encountering difficulty in adding a piece of the pie. Sandisk's securing of Smart Storage System and unveiling new micro SDXC will boost its income and build EPS. Fusion-io's procurement of Nexgen Storage and development with Spotify will create higher development with an expanded income for the company.
I suggest buy for both these stocks.