*Annual Shareholders Summary*
Here is a summary of yesterday's meeting that was well attended on a beautiful New England morning.
After a review of the recent past by Mr. Egan, M.Ruettgers (M.R.) began his portion by projecting the future for the sector. Specifically, he said that projections are for the GDP to grow at 3.4% through 2003. Compared to this, he reported that PCs are to grow 5.9%, Servers, 6.2%, Network Equipment, 8.0%, and Storage, 19.0%. He remarked that therefore Storage is estimated to grow 5.5 times the GDP over this time frame.
He sounded very much like our own Bill Fischofer when he stated that, "Revenue is going from servers to storage."
M.R. stated that storage is the "oil" of the new economy:
-Information is in Every industry
-Software is critical for management of information
-SAN and ESN (enterprise storage networks) store and provide the information
EMC's share of storage management, including the software for it will continue to grow.
DOT.COM growth will continue, but with "No storage - No Business". Storage in this area is doubling every 90 days. But EMC is not restricted to just DOT.COMs, as global 2000 companies are very much their customers. He stated that they were investing in Y2K last year, but are now shifting resources in order to "take advantage of the internet".
He showed a slide with two tidal waves threatening businesses, one wave being internet data, and the other enterprise data. The next slide showed a quiet, calm ocean that "the businesses are relying on EMC to provide for them.
He stated that the choices have already been made. The best of breed have been determined. 90% of all start-up DOT.COMs or businesses IPOing today would get their servers from Sun, networks equipment from CSCO, databases from ORCL, and storage from EMC. He stated that this is why he is partnering with two of these "best of breed companies", ORCL and CSCO, to ensure that they share standards going forward.
When new businesses are surveyed as to what they view as the most critical part of their decision-making, 40% think of storage, while 12% view servers as the most critical.
He stated that EMCs customer satisfaction surveys reveals 99.4% satisfaction, "20 points better than anyone else", and they are addressing the 0.6%.
He pointed to a new Clariion product and stated that this is what will address the mid-range market. He said that market segments now stand at $12 billion mid-range, $9 billion software, $2 billion NAS, $2 billion switches, and $15 billion enterprise storage, for a total of $40 billion.
"While one company claims to be the .(dot) in DOT.COM, EMC is the EVERYTHING.." "Everything PERIOD"
From 1995 to 1999 terabyte growth has been 900%. From 2000 to 2005, terabyte growth rate is projected at 1800%. "Typically when capacity grows, performance declines; yet we have double capacity and improved performance 4 times."
"We have a three year lead on competitors. We lead a market that has no limits."
"EMC stores most of the world's information and delivers it. He said that network and storage suppliers aren't called when systems are go down, now it's the newspapers that get the call.
$12 billion in revenue is still 2000 goal.
Q&A
"Before we get to our first question, let me first say that the Board of Directors has just met and authorized a 2 for 1 stock split effective 5/19 and payable on 6/2".
Applause, Applause
Question moderator: "Well, I bet that takes care of 99% of the questions."
First Question: Who do you view as your closest competitors?
Paraphrase, but extremely close: "It's IBM and Hitachi. But IBM is telling customers that they will not have full functionality as promised which results in diminished value for them in the equation. Hitachi follows our lead, so logically then, they are behind us.....about 3 years" <laughter>
We invested in Celera for five years, and the market in this area has just started to mature, so you can see that we are always in the process of developing <new products in our area>. We had ten fold revenue growth from a year ago in the most recent quarter.
Question: You have a lot of cash, are you looking at further aquisitions and/or mergers?
"We will be doing acquisition in the software area. We just did a small acquistion in this area of $290 million in an area that fit our needs." We will be doing more in this area. We will be "investing" in other relevant areas, "overall".
Question: Are you growing in international sales?
"Right now we are at about 60% domestic, 40% foreign, by 2003 we expect that to be 50% -50%. So, yes, we are growing globally."
Question: What do you see as your biggest threat to growth?
"A meteor. Seriously, we currently need 4,000 new employees to go with our current 20,000. We enjoy one of the lowest turnover rates, it's about 10%. So that means we need to hire 6,000 employees, effective employees to join our team. They need to be productive, as do the ones we have now. Our destiny is ours, it's just a matter of execution."
Repectfully submitted,
Marc
PS Following the meeting, I was treated by one of our threadmates to a great ballgame at Fenway Park, on a beautiful evening. He got these details first on the "T'as we traveled into the city. Nice meeting you Vance Tucker, and thanx for the ticket. |
