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Technology Stocks : EMC How high can it go? -- Ignore unavailable to you. Want to Upgrade?

To: bob gauthier who wrote (7302)	8/2/1999 8:27:00 PM
From: jad	Read Replies (1) \| Respond to of 17183

Shares of EMC rallied after it extended a contract and Merrill Lynch made positive comments about the storage company. EMC said Monday that it will extend its marketing, reseller and professional-services alliance with Forsythe Solutions Group, a unit of privately held Forsythe Technology, to 2002. In a press release, EMC said it expects the agreement to generate $500 million in revenue for the company over the next two-and-a-half years. Forsythe, an information technology company, offers EMC's symmetrix enterprise storage systems, software and integration consulting through its nationwide sales and consulting group. As part of the extended partnership, EMC and Forsythe will design, develop and implement customized EMC enterprise storage systems. At the same time, Merrill Lynch analyst Steven Milunovich talked up the company. After a recent meeting with EMC executives, Milunovich believes that EMC will continue to be the dominant storage provider. "EMC is the Cisco of storage thanks to its maniacal focus," wrote Milunovich in Monday's report. "While the rhetoric from HP/Hitachi, Sun, and IBM has increased, our belief is that EMC's leads in product, distribution, and service remain." The analyst said that demand from Internet companies has surprised EMC and will be an important driver of its growth. "Our sense is that EMC storage is being added to the current Internet infrastructure checklist of Cisco routers and Sun servers," he wrote. He also noted that EMC's product position "is defendable at premium prices for at least the next two years." EMC products cost between 40 cents to $1.40 per megabyte, while the new IBM (IBM) Shark product costs about 50 cents and more per megabyte. Milunovich also said that EMC's product is the "the most open at the server level" and can also be used with most switches and routers. He called service EMC's "secret weapon," even though the company "loses a lot of money" because of its two-year warranty. "EMC takes responsibility for all problems with a 'guilty until proven innocent philosophy' that contrasts with competitors' finger pointing," he wrote, noting that its overall satisfaction runs at a 97% rate, which is higher than that of top vendors in almost any industry. The company told the analyst that revenue growth should be closer to 35% than 30% this year, since revenue was up 36% in the first half of the year and that Y2K should not have much impact on results. Next year, he sees revenue increasing 34% to $7.2 billion, as international sales perk up. He expects that the company's analyst meeting on Thursday will be "well received by investors." He has a Buy rating and $76 price target on the stock. from SmartMoney.com