One issue with this analysis, if I do the math right (and assuming net margins don't change too much), is that you're implicitly expecting EMC to have something like $170B/yr in revenues 15 years out. ($5.2B in '99 compounded 40%/yr 5 yrs + 20%/yr ten more yrs). Is it reasonable to expect a company that huge to still grow revenues at 20%/yr? That's about the size of General Motors today.
Alternatively, your assumptions say that EMC's market cap would grow from something like $49B today up to something well in excess of $1.6T - 2.0T. This would be bigger than the largest 7-9 companies in existence today combined (MSFT, GE, INTC, WMT, XON, Merck, Pfizer, Coke, CSCO, IBM). And that valuation would be based on revenues only about the size of GM's today. Could something that big still grow at 20%/yr?
I'm not sure it passes a sanity test. I'm very interested to hear what everyone else thinks though.
Bill |
