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: pirate_200 who wrote (12116)	2/11/2001 7:10:05 PM
From: Gus	Read Replies (1) of 17183

The accounts receivable/DSO fluctuation occurs depending on geographic makeup of sales - whether it skews to US or outside US and also segment makeup of sales - enterprise or smaller Now you're just parroting company propaganda and avoiding the issue. Let me simplify it for you so you won't get confused: 1) Receivables have grown faster than Sales each of the last 3 quarters. That is an early warning indicator that could mean many things with the worst case scenario involving customers who have a hard time paying their bills and who could potentially trigger some major write-offs down the road. I happen to think the trend suggests that NTAP is sweetening the terms of its deals due to increased competition. Book-to-Bill has limited significance because NTAP has a high turnover business model. Gross Margins can quickly erode if NTAP has to write off bad receivables. 2) 40% of NTAP's revenues come from dotcoms who were doubling their storage requirements every 90 days. Again, Cisco indicated that its dotcom sales were at 50% of last year's levels and at 33% of its internal forecast for this year. Do you think NTAP is faring any better? The typical business plan for these dotcoms involve cash-burn for the first 3-5 years. With the equity market closed to these dotcoms, they now have to jack up sales more quickly and manage their expenses more stringently especially since the VCs have indicated that losing business models will not be supported for long. The reduction or total disappearance of the repeat business from these dotcoms could be hazardous to NTAP's financial health since it doesn't yet have the enterprise customer base to pick up the slack. 3) NTAP's NAS business is growing slower than the market while EMC's NAS business is growing faster than the market yet NTAP claims that there is no competition. 4) NTAP is a broken-down momentum stock with a loyal sell-side following but slowing sales and ballooning receivables. Connect the dots and you have a trader on your hands.

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