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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Uncle Frank who wrote ()	1/26/2000 11:12:00 PM
From: Mathemagician	Read Replies (4) of 54805

NTAP folks: EMC news regarding NAS earnings From EMC's press release at emc.com EMC's record fourth quarter performance was highlighted by the continued strong growth of the broad portfolio of EMC Enterprise Storage products and services. Storage revenue for the fourth quarter was $1.66 billion, up 27% from the fourth quarter of 1998. This growth was fueled by continued strength in EMC's software offerings as well as industry-leading growth in market segments such as storage-area networks (SAN) and network-attached storage (NAS). Software revenue was a record $281 million in the fourth quarter, up 71% compared with the fourth quarter of 1998 and representing 17% of EMC's total storage revenue for the quarter. For the full year, EMC achieved software revenue of $822 million, 85% higher than 1998. In the SAN connectivity market, EMC Connectrix systems revenue was up 44% sequentially compared with the third quarter, establishing the industry's highest annual revenue run rate in this burgeoning sector. In the NAS market, EMC Celerra systems revenue grew sequentially at an industry-leading rate of 40% compared with the third quarter of 1999. This "industry-leading" growth rate can only be explained by comparing with the growth rate of 20.7% for NTAP posted in October. This can mean one of two things: 1. EMC is actually the new market leader. This is what they are implying. 2. EMC is attempting to exploit the timing of the earnings announcements in order to secure more market share and, since NTAP is the true market leader, NTAP is about to post some truly phenomenal growth in February. I seem to recall in the RFM that the gorilla candidates would be proclaiming themselves victors (market leaders) early and often. We will find out when NTAP releases their numbers in Feb. I guess you all know where DS (presumably) and I stand. :) The basis for my judgement: Market share is the determinant of the market leader, not revenue growth. If EMC's claim is based solely on revenue growth and not market share it is patently false for our purposes. In that case this proclamation of EMC as "market leader" is an example of a likely Chimp creating FUD in order to gain some ground on the leading Gorilla contender, as per RFM. Your thoughts? Mathemagician

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