Sunday, August 12, 2012

"WOZ , two weeks in a row? Well, Steve Wozniak is the Chief Scientist at Fusion-IO, and Fusion I/O is on the move"

Dow Jones Industrial Average (Up) 13,207.95  Week ending 08-10-2012

 Steve Wozniak
Like James Mason, Pat Boone and Arlene Dahl in the 1959 version of the movie  "The Journey to the Center of the  Earth",  I seem to be following a path and like the explorers in the movie,  I keep looking for the three notch marks that denote the clues that you are on the correct trail. This is why I am now talking about Steve Wozniak again, for the second week in a row. He just keeps popping up on the path, like some Alice In Wonderland character.

Steve Wozniak reveals himself as the Chief Scientist at data software storage specialist,  Fusion-IO.

Fusion I/O (Symbol FIO, $26.86) showed up on the radar last week with a +5.84 point gain day on Friday Aug 10, up 27.78%

There's that WOZ again, What is he up to now and why did his stock move up??

Well, Fusion I/O Inc. reported 82% revenue growth in Fiscal year 2012 with its most recent quarter. 

Revenue growth has looked like this:

          2008  -          $648,000
          2009  -    $10,150, 000
          2010  -    $36,216,000
          2011  -  $197,204,000
          2012 -   $359,349,000

Quarter this year $106.6 Million over quarter last year $71.7 Million. Non-GAAP gross margins are 57.6%.

This is not a stock I would go out and buy on Monday after this big run-up. I would pick a good entry point ($23 - 25$ per share) when you see it and plan on holding this for 3-4 Years.  R&D and SGA expenses are high right now because of the rapid product development and revenue growth, so earnings are yet to come on stream in abundance. 

These guys do Flash Memory Server Acceleration Technology and SAN - storage arrays. I consider them in a niche space very close to VM Ware.

Piper Jaffray's Andrew Nowinski currently has a target price on the stock of $38.00 per share.  He feels that their technology along with combining with companies like  NetApp, that they should be able to compete effectively against the likes of EMC/ VM Ware. 

"Lazard Capital Markets’s Edward Parker, who rates Fusion stock a Neutral, wrote that ION, “which is essentially a server bundled with Fusion-io drives and new data management software such that the server, or a cluster of servers, can effectively operate as a storage array or a SAN,” is a positive step, given that Fusion’s traditional sales of so-called PCIe cards may not be sustainable over the long term. However, Parker thinks it may be a tough route to market for Fusion without having the product bundled by Hewlett-Packard, (HPQ), or another vendor" this as quoted in Tiernan Ray's August 3rd, 2012 Barron's article.

So, in review, this is a stock to put on your Watchlist, that you can add at the right price, as a building block, for a long-term aggressive growth portfolio. If you don't have a Watchlist you should start one. You get the picture. Hopefully FIO will shoot you to the top of the volcano, like the people below coming back from their "Journey to the Center of the Earth".

I hope that you are having an "Olympic" Gold Medal summer and have gotten some vacations or holidays in there. Take some time for yourself, the rest of this stuff will be here when you get back.


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