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

To: Tony Viola who wrote (9723)	3/31/2000 4:06:00 PM
From: JDN	Read Replies (1) \| Respond to of 17183

Dear Tony: The drives EMC uses are not just any ole drive, they are bake and shake tested etc etc. Built to very strong standards. However, it is ridiculous to think that just because a company goes private they would no longer do business with probably their biggest client. Anyhow, its untrue. Actually, what I was thinking, (thats all it is not even a rumor just my INTERNAL thoughts) was that Veritas plans ultimately to sell the disc drive division directly to EMC after the dust settles from taking it private and in the event they suffer a loss on the sale not having to put it on their P&L statement. JDN

To: Tony Viola who wrote (9723)	3/31/2000 7:11:00 PM
From: Gus	Read Replies (2) \| Respond to of 17183

Actually Tony, you have to make a distinction between the cut-throat desktop disk drive business and the higher-margined enterprise disk drive business. Seagate is the dominant enterprise drive manufacturer and it was the exclusive supplier to EMC for a long time until SEG ran into some operational problems a few years ago and EMC established supplier relationships with IBM and Fujitsu. Seagate has since then righted its manufacturing operations and has maintained its status as EMC's primary disk drive supplier. As an aside, the relationship between EMC and Seagate used to be underpinned by the personal relationship between Richard Egan and Al Shugart until Al unceremoniously got the boot in 1998 and was replaced by the same guy who is now leading the charge -- futile if you ask me -- to part SEG from its substantial investment portfolio and to take the core manufacturing operations private on the cheap. Anyway, the relationship between SEG, the dominant enterprise drive vendor and the largest disk drive manufacturer, and EMC, the dominant enterprise storage vendor is a symbiotic one and has allowed SEG to lead the industry - and be the single source for extended periods of time -- in 7200 rpm drives, fibre channel drives, 10000 rpm drives and soon in what I consider its first truly breakaway product, the 15000 rpm drives especially since I think EMC is opening up opportunities for SEG in the low-end part of the SAN/NAS market. SEG's formidable technology lead in these product lines can be attributed in part to their close working relationship with the premier enterprise storage system designer and architect, and presumably healthy respect for EMC's soon to be 5th generation family of software products. Does the proposed buyout affect EMC in any way? Up to this point, there is nothing to indicate that the relationship is in any kind of jeopardy. Who, after all, can afford to buy the amount of enterprise drives that EMC sources every year at the prices that only EMC, which has well-deserved price premiums reflecting its multi-year lead on the competition, can afford? EMC's goal, for example, of doubling revenues from under $6B at the start of 2000 to about $12B at the end of 2001 would mean at least $4B to $5B in annual drive purchases from SEG, which posted TTM revenues of $6.8B; albeit, in probably the last year of the worst downturn in disk drive history. There is no doubt in my mind that EMC would act swiftly and decisively should its disk drive supply be even remotely at risk. Just to show you the type of awareness and savvy consistently displayed by MR and his crew over the years, they've been collaborating with some startups in an optical tape program financed by DARPA and they recently joined Lucent in investing in a holographic storage startup called Siro, which counts Al Shugart as one of its directors. Nobody seriously expects that disk drives will be obsolete in the next 5-10 years, but yet EMC has small research outposts keeping track of anything remotely disruptive. Having said all that, Sue Herrera on CNBC just had somebody from Barron's on who is doing a story on the inevitable conflict between EMC and VERITAS. That just put another twist on the farcical VERITAS/SEG soap opera, IMO. We'll see what happens.