re: why EMC:
1. valuations are acceptable (in contrast to the semi-equips). When the sector rebounds, EMC will earn $1/share, maybe in 2002, certainly in 2003. Since I think their LT EPS growth rate will be at least 30%, that works out to a PEG < 1. I won't use the consensus forward 12M EPS numbers, because these are trough earnings from the most severe downturn this sector has seen.
2. EMC doesn't have the problems of the network equips: no vendor financing, no past acquisitions at absurd prices to be written off, no huge inventory writeoffs pending, no debt, etc. During boom times, they didn't make the mistakes that CSCO and JDSU and LU made.
3. EMC's customer base is not up to their eyeballs in debt, or going bankrupt.
4. EMC is a Gorilla. It dominates its sector, it has a track record of repeatedly fending off attempts by other big companies to invade their turf.
5. I think storage will be at the top of the buy-list, when IT spending budgets increase for the Fortune 500.
Caveat: I'm the guy who thought WCOM was undervalued at 40, last year. |
