Thread,
This from Morgan-Stanley re: EMC, one of Seagate's largest customers:
POINTS: - Yesterday, we attended an EMC analyst meeting and dinner. - The
>>main message at both events was that the enterprise storage
>>market opportunity remains very strong (expected to be $35B by C2001),
>>and EMC's positioning and strategy are as solid as ever. - We believe that
>>EMC's "bear hug the customer" approach to customer
>>sales, service, and support will drive revenue growth north of 30%
>> It is EMC's
>>approach to fix problems before they occur, and anticipate customers
>> We think that this is a somewhat
>>unprecedented approach to the technology market - one which will be
>>quite hard to duplicate. At the meeting, we walked through EMC's
>>competitive testing
>>facility (where the company runs 24X7 testing on almost every hardware
>>platform in the world to ensure capability and compatibility between
>>these systems and EMC, and the company's service center, where systems
>>call home any time of the day for maintenance. While there is a lot of
>>competitive noise in the market, we believe
>>EMC's market lead is still at least 2 years, and maintain that it is
>>still way too early to discount for competitive products and services
>>that don't yet fully exist. In the final analysis, we tend to believe
>>that a number of
>>perceived competitors may very well end up being EMC partners by the
>>time many believe their competitive products could hurt EMC (note that
>>already half the players in the server market are currently resellers
>>of EMC). At the meeting, EMC signed up for a revenue target of $10B by
>the
>> This is a relatively high target, as $10B in
>>2001 would indicated a CAGR in revenue of 36% from C1997 to C2001 -
>> Do we
>>think they can reach $10B - You betcha! After an extremely strong CQ2:98
>>result on July 17, and this
>>positive update, we remain comfortable with our positive view on the
>>stock, and believe that there is upside to our earnings estimates. In a
>>tough technology investment period, it is always great to find
>>solid companies with great products, "paranoid-as-Andy Grove"
>>management teams, and clearly outlined strategies that are
>> EMC is one such
>>company, and we would continue to be buyers of the stock even as the
>>shares are up 87% YTD. We continue to rate EMC shares Outperform and our
>>price target is $75,
>>or 40 times our C1999E EPS of $1.85, well in line with other
>>technology leaders such as Microsoft (45 times C1999) (MSFT, $107,
>>Outperform, Covered by Mary Meeker), Dell (43 times) (DELL, $108,
>>Outperform), and Cisco (41 times) (CSCO, $99, Strong Buy, Target 105,
>> We note that EMC looks undervalued on a P/E
>>to Growth basis at 1.08 when compared to other industry leaders such
>>as CSCO @ 1.34, MSFT @ 1.94, and DELL @ 1.48. More details will follow.
>>Gillian Munson
>>Morgan Stanley Dean Witter
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