To: Gary who wrote (8927 ) 1/26/2000 11:10:00 AM From: jad Respond to
How much higher can the stock of this provider of enterprise storage systems, software and services go? Apparently much higher as EMC continues to benefit from the growth of the Internet. According to the data storage and software company, it earned $0.34 per share on an operating basis in Q4, three cents better than the First Call estimate, compared to $0.25 per share in the year-ago period. Sales increased 21% to $1.88 billion with the inclusion of Data General which EMC purchased last October. Latest results were driven by strong demand from Internet companies and this demand is not expected to evaporate soon as more traditional companies are making the transition to the Internet in a very quick way which should continue to drive sales and earnings. In fact, according to EMC, revenues in the latest period were fueled by software and system sales to companies that use the Internet. In the latest quarter, software sales surged by 71% from a year-ago. And EMC also noted that software sales were 17% of EMC's total storage revenue for the period. Given the strong results and the positive outlook for more good things down the line, it seems that EMC still has a very bright future. Ahead of earnings, the stock rose 5 points yesterday even with the choppy trading that prevailed for much of the session. Hence, some profit taking following today's earnings release would not be surprising. However, EMC has built a very solid foundation which is currently benefiting from the business transition to the Internet. This transition and the emergence of more dot.com companies should continue to fuel sales and earnings in the coming quarters. Keep in mind, shares of EMC currently trade at a pricy multiple of 84 times next year's earnings. Under normal circumstances, such a high multiple would trigger a sell signal, given current annual earnings growth of 35%. However, these are not normal times and EMC has enough name recognition to continue to attract new business to its growing stable of product offerings. RN from Briefing
