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

To: JDN who wrote (10682)	7/20/2000 2:38:58 PM
From: Lynn	Respond to of 17183

Thread: ML's Steven Milunovich and John M.A. Roy released a research report on EMC today titled, "EMC Corp: Any Questions?" ML retains it's BUY/BUY ratings. Here are a few snippets from the report, including a nice paragraph for those of us who hold shares of NTAP, too: Price: $83 1/8 12 Month Price Objective: $100 Investment Highlights: EMC reported stellar 2Q results, coming in $0.02 above estimates and increasing its revenue growth forecast to 30%. We reiterate our Buy rating with a $100 price objective, which is 100X our 2001 estimate. The PEG ratio is a bit over 2X on next year’s earnings, expensive but less than other franchise names such as Intel, Oracle, and Cisco. Fundamental Highlights: EMC’s revenue increased 30% to $2.15 billion compared with our 24% forecast while EPS was $0.19 versus our $0.17 forecast. The new product cycle kicked in this quarter with base EMC growth the best in five years. Software handily exceeded expectations as well in doubling. Based on the strength of new products we raised our EPS estimate for 2000 from $0.73 to $0.76 and 2001 from $0.95 to $1.00. Competition is having little impact on EMC. Still, EMC plans to price aggressively to accelerate the market and stave off any threats. [snip] Network Attached Storage (NAS) grew to $100 million, a 660% year-on-year growth. This revenue is half of Network Appliance’s (NTAP, C-1-1-9, 100 9/16) $200 million last quarter. NAS is the one area where EMC is not the leader. EMC acknowledges that NetApp is its #1 enemy, but NetApp is not a near-term threat despite its disruptive potential. We see 10 Gigabit Ethernet NAS systems emerging as an alternative to Fibre Channel-based storage area networks in the next 18 months. [snip] Outlook: Demand Without End We have raised our numbers based on the prospects for the new products and strong storage demand. The company expects revenue to rise by 30% this year, up from the 25% growth expectation set last quarter. With the Symmetrix 8000 shipping only since April, the next few periods should be strong. We are modeling a 35% increase in enterprise storage revenue and a 77% increase in software revenue for 2000. [snip] EMC is king of the storage hill. Considered one of the four horsemen of the Internet, EMC now has nearly the market cap of IBM. At a P/E of 110, investors continue to ask, “What are the risks?” We hate to be redundant, but as we stated last quarter “we think the biggest risk for investors is not being in the stock. In our opinion, no one is close to knocking off EMC today, and the market opportunity is huge.” This stellar quarter has given us even more conviction in this view. [end of ML report] All in all, it is one great report! I hope the one ML puts out for our SUNW tomorrow is equally glowing. Regards, Lynn