After two days of meetings with EMC (NYSE:EMC) execs, analysts left Boston feeling better about the data
storage giant's longterm prospects but frustrated with the lack near-term guidance on growth, margins and
pricing.
In a note to investors, Golman Sachs (GS) said it is "comfortable" with the company's leadership position in
the sector, "maybe even a bit more so than before." However, GS added that the "lack of complete clarification
on immediate concerns is going to act as an an overhang on the stock."
Like other hardware manufacturers, the Hopkinton, Mass., company, has seen revenue and earnings slide as
customers cut capital budgets. EMC's stock is hovering around 20, well off a high of 104 in September.
Denied specifics, GS and other analysts speculated that demand in the current quarter would be similar to its
June quarter, one of its worst.
GS did applaud several EMC initiatives intended to help spur growth and improve the bottom line. They
include: a greater focus on software and services (which has better profit margins) from 36 percent of
revneues to 50 percent by 2003; the introduction of new 181GB hard drives; a new approach to sales, whereby
staffers are more responsive and has some pricing flexibility.
While the sales force may be kinder, and gentler, execs were downright nasty in speaking about their
competitors.
Frank Hauck, the company's sales chief, was quoted as saying "Look at NetApps. Now stick a fork in 'em.
They're done." CEO Joe Tucci went after other rival such as IBM (NYSE:IBM), saying the company was giving
away its Shark data storage products like the toys in McDonalds Happy Meals.
While brash, the company also regularly added the caveat that its optimism was based on the belief that the
economy would pick up. Tucci said he has a "Plan B" to further cut costs if it doesn't, however he would not
offer any specifics. In May, the company laid off 1,100. |
