Salomon Axes Storage Team

Wall Street brokerage firm Salomon Smith Barney, part of Citigroup, laid off its three storage analysts today in an effort to cut costs, industry sources tell Byte and Switch.

Salomon is expected to reassign its coverage of this sector to other analysts, insiders say.

Citigroup had no specific comment on the elimination of its storage research team but issued the following statement: "Given the market realities, we are continuing to make targeted reductions throughout the organization."

A source familiar with Salomon's plans says, "I'm sure there will be more cost-cutting as they reorganize the research department as a whole." This source, however, was unable to provide more details on this reorganization.

Clint Vaughan, formerly Salomon's senior analyst for storage and a major name in storage circles, was marched out of the building this morning, along with supporting analyst Brian Hertzog and associate Pei Hung. "We had an idea it was coming... but it was still a shock," says one of the analysts, who did not want to be quoted by name. "Storage wasn't a big focus at Salomon."In December 1999, Vaughan and his associates were the first Wall Street analysts to produce a white paper on storage networking, referred to by the industry as "The SAN Book." In it, Salomon predicted that most storage would become networked and that Fibre Channel would dominate the storage landscape for the foreseeable future.

U.K. research group Datamonitor reports that investment banks, facing the most severe industry downturn for three decades, have already axed more than 100,000 jobs globally in the last two years.

Equities sales and research staff, once highly prized and compensated with fat bonuses during the Internet boom, are now on the firing line. Along with the tough market conditions, they also face increased scrutiny from new U.S. reforms banning investment banks from paying equities research teams out of revenues earned by corporate finance departments.

In other words: You're better off out of it, guys! Find a nice spot on the beach for a couple of months and send us a postcard!

As a result of Salomon's actions, Byte and Switch will be looking for a new candidate for its Top 10 Storage Stars movers and shakers list to replace Vaughan. Send your suggestions to [email protected]