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: JakeStraw who wrote (17040)	4/24/2008 8:30:39 PM
From: Lynn	of 17183

North America Investment Daily — 24 April 2008 (C) Page 33. EMC Corp (EMC) Maintain Hold Rating, $17 Price Target ? Conclusion(s) — While on a rollup basis the quarter was in-line, we continue to see evidence of fraying at the edges in the form of inventory build and weak real-time demand indicators (new licenses and hardware). Core EMC valuation is roughly inline with peers while near-term fundamental risk persists. We continue to recommend waiting for a summer re-set before considering building a position. Maintain Hold and $17 price target. ? Concerns — Although not EMC’s problem alone, the fundamental risk profile continues to deteriorate, in our view. Heading into summer seasonality in Europe, which arguably is already showing a macro-driven deceleration, key offsets from a demand and currency benefit will likely evaporate. Coupled with incremental hiring and a potentially cannibalistic product cycle, we view the best case as being an extremely back end weighted year. ? Fundamentals — EMC reported March sales and EPS of $3.5B and $0.16, excluding IPR&D charge. We had been at $3.4B and $0.15 with consensus at $3.4B and $0.16. Software licenses were down year-year and hardware slightly missed our estimate, offset by better maintenance renewals and services. Management maintained their full year target of $15B and $0.78. We remain below guidance and consensus at $14.8B and $0.76. ? Implications — EMC’s incremental market share focus in the face of a struggling NetApp and an improving IBM storage division (mainframe attach) greatly enhances the chances of a more aggressive pricing environment.

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