Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: JRI who wrote (9376)	3/2/2000 6:53:00 PM
From: Gus	Read Replies (1) \| Respond to of 17183

Let's look at the underlying fundamentals, JRI. The stock price will reflect that sooner or later. At today's close, EMC is sporting a market cap of $118.7B while NTAP has a market cap of $28.8B. Both EMC and NTAP sell hardware and software targeted at different parts of the corporate technology market so let's add a pure software company like VRTS -- market cap: $53B -- for context. moneycentral.msn.com VRTS has the fastest sales growth (183% TTM) than either NTAP (91%) or EMC (69%), but EMC Software (TTM $822M) is bigger than VRTS ($596M) and grew at 84% YoY. By the law of large numbers, both NTAP ($470M) and VRTS ($596M) will most certainly outgrow EMC which is only going from TTM revenues of $5.6B to $12B by the end of 2001. Relative to size, however, EMC's sales growth is exceptional especially with the growth of the higher-margined software business while VRTS and NTAP are just above-average relative to their existing revenue base. But nevertheless all three are growing at astounding rates relative to other parts of technology, wouldn't you agree? Why not own all three then? Now, if like most of the long-time holders of EMC you accept the premise that EMC is the dominant storage company because it has been selling not just the hardware or the software but the system architecture to future-proof technology since 1995 then you wouldn't obsess too much about the short-term price movements or relative performance comparisons with dubious value, but you would focus instead on developments in the EMC ecosystem like Seagate's 15000 rpm disk drives, its Xiotech division and its business intelligence software unit which could portend the private-labelization -- or commoditization -- of the low-end RAID and caching market. Issues like scarcity and the state of the reseller business come into play here, but obviously, these are matters of graver concern for a momentum stock like NTAP than it is for EMC or VRTS.