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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Mannie who wrote (24799)	12/13/2000 6:57:25 PM
From: Mannie	Respond to of 65232

Great EMC article from Individual Investor. Love this company as one to just tuck away for years. Nothing beats being the best-of-breed pure play in a rapidly growing market. EMC, based in Hopkinton, Massachusetts, has become the world's biggest and most profitable maker of information-storage systems-refrigerator-size servers used to collect, manage, and tap information flowing through corporate networks and the Internet. Worldwide demand for storage systems reached $44 billion in 2000, and as bandwidth explodes -- EMC estimates that within five years there will be more than 20 billion miles of fiber-optic cable (compared with 20 million today), carrying 50 million times the data -- the information-storage industry could grow as much as 38% annually, says UBS Warburg technology analyst Charles Wolf. No company is better positioned to profit from that growth than EMC. The company owns 30% of the market-three times the share of its nearest competitor, Compaq Computer. And even though such companies as IBM, Sun Microsystems, and Hewlett-Packard develop and market their own storage devices, Wolf can't imagine any competitor successfully challenging EMC. The company's storage systems have become the de facto standard for corporate information management: 95 of the Fortune 100 companies use EMC systems, as do eight of the top 10 U.S. Internet service providers and Japan's three largest; 25 of the 30 companies that make up the DAX (the German stock exchange) index; and 66 of the FTSE (the London stock exchange) 100 index. That lock on the market is expected to boost EMC's 2001 earnings by 34%-to $1.03 a share-on $12 billion in revenue. And analysts predict annual sales could reach $50 billion by 2005. No wonder then that Wolf thinks the major risk for EMC is that it could be growing too big too fast and that it may have problems managing its swelling payroll of more than 21,600 employees worldwide. "It's absolutely essential that EMC maintain its strategic vision," says Wolf. So far, though, the company has handled growth just fine. And to secure its position atop the marketplace, EMC chief executive officer Michael C. Ruettgers plans to spend an ambitious $10 billion on research and development during the next five years. This splurge is expected to result in more blockbuster products like EMC's Symmetrix 8000 storage system, which made its debut in April and garnered more than $500 million in sales in three months, roughly one fourth of the company's second-quarter revenue. What's more, Ruettgers recently launched an advertising campaign intended to reach beyond the business information technology departments that buy EMC products; this should build brand recognition with CEOs. Merrill Lynch analyst Steven Milunovich deems EMC's horizon limitless. "The biggest risk for investors," says Milunovich, "is not being in the stock," which has climbed a whopping 81,000% in the past 10 years. Most analysts who follow EMC predict that the share price, which reached $85 in mid-November, will rise above $100 in 2001. "No one appears close to knocking off EMC today," says Milunovich. "The market opportunity is huge." -- Linda Keslar