EMC How high can it go? Message Board

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Technology Stocks : EMC How high can it go?

EMC 29.05

0.0%

Sep 15 5:00 PM EST

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To: John Carragher who wrote (10305)	5/31/2000 3:29:00 AM
From: Gus	Read Replies (1) of 17183

A stubborn analyst to be hanged, eh? Actually, his report was bullish overall and ended with a genuine buy on the dip recommendation. He actually said that demand for EMC's newest Symmetrix exceeded supply, which is impressive because the product launch was made during this quarter. The thing that surprised me was his insistence on this false linkage between IBM's continuing problems with the 10K rpm drives and a possible revenue shortfall at EMC on account of production issues. As EMC pointed out, they source about 90% of their drives from Seagate, which started volume production of its industry-leading 10K rpm drives in late 1997 or early 1998. Incidentally, Seagate is currently in the process of slowly rolling out its 15K rpm drives. Seagate is using fluid-bearing motors and smaller (2" vs 3" for the 10K rpm drives) platters to achieve those higher spindle speeds (read: throughput). Seagate also shares ownership of this very difficult motor technology with its privately-held Japanese supplier named Minebea, which controls over 60% of the world market for small precision motors. That kind of technology advantage is measured in years and it gives you perhaps another reason why EMC is channeling even more business in Seagate's direction as it marches towards $12 billion in sales by 2001. It will probably take some time for the general public to appreciate the financial impact of that kind of component technology lead coupled with EMC's own 3-year lead in system architecture. Anyway, everybody in the storage industry has grown accustomed to the fact that Seagate's high performance drives tend to be single-sourced for extended periods of time -- thus the supply agreements with Fujitsu for EMC's Japan expansion and IBM for second-sourcing considerations -- so this false linkage is mildly puzzling.

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