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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From: JakeStraw	12/3/2008 9:31:50 AM
	of 17183

"EMC is easily one of my favorites. The company misses the first cut on many of my stock screens because it has some $3.4 billion of debt on the balance sheet. However, a deeper look at EMC shows cash far in excess of debt. The total cash stockpile of $ 5.8 billion gives EMC net cash of $2.4 billion, or more than 10% of its market cap. Revenues have been growing at a double-digit clip even in the difficult economy and should be over $15 billion this year. Earnings are expected to fall a little shy of the 2007 mark but are still healthy at an anticipated 77 cents a share. The company should grow earnings and revenues in the low teens annually for the next several years. Data storage is going to continue to be an expanding business and the security side of the industry will be explosive when the recession ends. EMC also owns 85% of fast-growing virtualization company VMware . That stake is worth more than 25% of EMC's share price. Net of VMware and cash, you are paying a bargain price for EMC at these levels. It has been attracting some attention form noted value and activist investors including David Einhorn at Greenlight Capital and Bill Ackman at Pershing Square Capital. The company recently spent some of its cash on two small acquisitions. The combination of the two -- to be called Decho -- will specialize in personal online security and help users maintain and protect what EMC calls their digital echo: all information and personal documents stored on the Web. The marketplace for storage and protections services is expected to grow at better than 60% annually for many years to come and could become a significant source of profits for EMC. EMC can use its cash to continue buying new businesses and technology, but more important, the cash offers resources to stay upright while the economy falters. Its storage business and cash pile could make the company a takeover candidate itself. EMC would be a good fit for several companies, including IBM and Hewlett-Packard . The combination of VMware and net cash would finance about 40% of the stock price." biz.yahoo.com

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