Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Fusion-IO, Inc. (FIO): Will This Busted Tech Stock Ever Return to Glory?

Storage leaders

Maybe, size ultimately matters and Micron and Seagate Technology PLC (NASDAQ:STX) will eventually eat the lunch of Fusion-IO, Inc. (NYSE:FIO) by converting to flash storage options just as the sector takes off. Unfortunately, sometimes firms aren’t able to convert a hot new technology into a commanding lead as the giants wake up and overthrow the challenger before it gains enough scale.

With the inability of Fusion-io to derive significant profits from those two large customers, it is now stuck with a much higher PE ratio than both Micron and Seagate. The later trades at a remarkably low 8 times forward earnings even after seeing strong gains. In addition, Seagate offers a 3.4% dividend yield on top of that.

Micron isn’t too far behind with a 15 times forward earnings multiple and could see more gains if earnings estimates for fiscal 2014 continue to jump. The stock doesn’t offer the dividend yield, but analysts are becoming ever more bullish on earnings next year. The expectations have jumped from $0.65 to $0.95 with the high-end analyst forecasting $1.40.

Bottom line

Fusion-io doesn’t appear to be a tech stock headed back to glory. The negative analysts expect competitive pressures to erode market share while the bullish analysts expect strong revenue growth. Unfortunately, neither group expects the future to be overly positive to earnings as the numbers hover below the reported earnings for fiscal 2012. Until Fusion-io shows the ability to fend off competitors with profitable growth, investors need to avoid this stock even at all-time lows.

The article Will This Busted Tech Stock Ever Return to Glory? originally appeared on and is written by Mark Holder.

Mark Holder and Stone Fox Capital Advisors, LLC have no positions in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.