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

To: Bob Frasca who wrote (10662)	7/20/2000 3:00:27 AM
From: Gus	Respond to of 17183

Mcdata EMC Mcdata/EMC (%) 1Q1999 13.2 39.0 33.8% 2Q1999 21.0 46.0 45.7% 3Q1999 22.7 24.0 94.6% 4Q1999 38.4 34.0 112.9% 1Q2000 47.1 39.0 120.8% 2Q2000 ? 37.0 ? 1) EMC owns 100% of Mcdata Holdings, which owns 100% of Mcdata Class A (81m shares). Mcdata Class A owns 86% of Mcdata Class B (25m shares). This owner- ship percentage fluctuates with EMC's contracted employee option program for Mcdata. 2) The Mcdata revenues that EMC has been reporting in its books since the 1997 reorg consist of the following components: a) ESCON Director Switch revenues net of service fees paid to Mcdata for acutal design and manufacture. b) Because EMC still owns 50% of Mcdata, it also reports a prorated version of Mcdata's core revenues. 3) Mcdata's CORE revenues consist of the following: a) Service fees paid by EMC for the ESCON Director Switches. b) FICON bridge card revenues c) FC Director Switch/FabricReady products Notes: 1) Connectrix grew 345% YoY. The ED5000 Director Switch, which EMC uses in its flagship switch product, accounted for 43% of 1Q2000 Mcdata Core Revenues of $47.1 million, or $20.2 million. EMC also uses Mcdata's EFC software product as part of its ControlCenter suite. 2) Mcdata's FC switch/software business grew 97% YoY. 3) ESCON declined 19% YoY. 4) Mcdata's ESCON/FICON revenues will probably show some growth when IBM, which just posted storage revenue growth of 30% YoY, introduces its G7 S390 mainframe under a new pricing scheme later this year. Also, IBM still has to add FC connectivity to all the Shark systems it has sold over the last year. Mcdata's ESCON/FICON business should benefit from this because Mcdata has been the exclusive supplier of ESCON Director Switches to IBM for the last 6 years. I think it is clear, however, that Mcdata will continue to grow with EMC's Connectrix for the next few quarters until the IBM part of its business start to pick up steam.

To: Bob Frasca who wrote (10662)	7/20/2000 3:00:49 AM
From: Gus	Read Replies (2) \| Respond to of 17183

Mcdata EMC Mcdata/EMC (%) 1Q1999 13.2 39.0 33.8% 2Q1999 21.0 46.0 45.7% 3Q1999 22.7 24.0 94.6% 4Q1999 38.4 34.0 112.9% 1Q2000 47.1 39.0 120.8% 2Q2000 ? 37.0 ? 1) EMC owns 100% of Mcdata Holdings, which owns 100% of Mcdata Class A (81m shares). Mcdata Class A owns 86% of Mcdata Class B (25m shares). This owner- ship percentage fluctuates with EMC's contracted employee option program for Mcdata. 2) The Mcdata revenues that EMC has been reporting in its books since the 1997 reorg consist of the following components: a) ESCON Director Switch revenues net of service fees paid to Mcdata for acutal design and manufacture. b) Because EMC still owns 50% of Mcdata, it also reports a prorated version of Mcdata's core revenues. 3) Mcdata's CORE revenues consist of the following: a) Service fees paid by EMC for the ESCON Director Switches. b) FICON bridge card revenues c) FC Director Switch/FabricReady products Notes: 1) Connectrix grew 345% YoY. The ED5000 Director Switch, which EMC uses in its flagship switch product, accounted for 43% of 1Q2000 Mcdata Core Revenues of $47.1 million, or $20.2 million. EMC also uses Mcdata's EFC software product as part of its ControlCenter suite. 2) Mcdata's FC switch/software business grew 97% YoY, implying revenues of $41.4 million. 3) ESCON-based products declined 19% YoY. 4) Mcdata's ESCON/FICON revenues will probably show some growth when IBM, which just posted storage revenue growth of 30% YoY, introduces its G7 S390 mainframe under a new pricing scheme later this year. Also, IBM still has to add FC connectivity to all the Shark systems it has sold over the last year. Mcdata's ESCON/FICON business should benefit from this because Mcdata has been the exclusive supplier of ESCON Director Switches to IBM for the last 6 years. I think it is clear, however, that Mcdata will continue to grow with EMC's Connectrix for the next few quarters until IBM and Hitachi become a much larger part of its business.