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

To: Tony Viola who wrote (11908)	1/23/2001 12:04:05 AM
From: Tulvio Durand	Read Replies (1) \| Respond to of 17183

Betting on EMC by Elyssa Jaffe From: Idea Advisor 9:13:00 AM January 22, 2001 GMT ideaadvisor.com ------------------------------------------------------------------------ EMC [EMC: NYSE], the leading data storage provider, has been one of the premier technology companies for over the last decade. The company has benefited from the wave of data growth, as it is the only company that provides a full storage solution. With no end to this explosion in sight, IDEAglobal anticipates above-average performance from EMC for some time to come. And we certainly expect its next quarter will continue to prove the stock’s worthiness and premium valuation and rate it a Buy. Many of EMC’s peers within the technology arena have warned of weakened demand due to shrinking information technology budgets and a general economic slowdown. However, the industry in total, and EMC in particular, has not experienced any waning in storage expenditures. IDEAglobal believes that this is due to the important nature of storage in the information cycle. As a result, it would necessarily be the last industry sector to suffer. Emphasizing this point, a recent study commissioned by EMC and conducted by the University of California concluded that corporations and individuals should together generate more information over the next three years than the total output over the past 40,000 years. Such indescribable growth will easily translate to outsized earnings growth for years to come. More immediately, speaking of the upcoming 4Q release, IDEAglobal remains comfortable that the company will meet or exceed estimates of $0.24 per share in earnings and $2.6bn in revenue. Back in December the company disclosed that it was comfortable with current estimates. At that time, as well as just last week, it stated that it was comfortable with its revenue target of $12b in 2001, which would be double 1999 levels. EMC currently dominates the storage industry, with a 35% share of the market, surpassing rival IBM [IBM: NYSE], with a 22% share. Storage revenues last quarter accounted for almost 95% of the company’s revenue base. Total storage revenue in the quarter increased 47%, more than the 43% growth registered in the 2Q. The rate of growth was the highest in more than five years. EMC’s overall served market, mainframe and network storage and related software and services, is expected to climb from $44bn this year to $78bn in 2003 and more than $100bn by 2005. And the lion’s share of this growth we expect to be captured by EMC. We believe the company should be able to garner at least 35% of the market in 2001. We view EMC as one of the premier players within the computing industry and believe the shares are one of the most rewarding ways of playing the technology sector. Market Timing From the Technical Desk On Dec. 18, we said: "The December rally in EMC [EMC: NYSE] sputtered and has faded out. The intermediate-term downtrend reigns again. It looks likely to fill the June 2 up-gap at $60 in two to four weeks. A near-term bounce to $74 is a possibility." EMC hit our target of $60 and has rebounded. Look for the stock to challenge the downtrend line at $83 in one to two weeks. It is trading at $77-5/16 currently. Risk Tolerance: *** (* Low risk, ***** High risk)

To: Tony Viola who wrote (11908)	1/23/2001 9:38:11 AM
From: Road Walker	Read Replies (1) \| Respond to of 17183

Tony, CC just ended. Outlook for 2001: - Reiterated 12 Billion rev. - Growth inf. systems mid 30's % software 50% *services 50% - GM's mid to high 50's - No slowdown in 1st half per MR, from customer comments -Quarterly rev growth mid 30% (this was interesting/ Laura from GS asked if they were guiding rev growth lower, as the current 1st quarter expectation was rev growth of about 39%, they hummed and hawed and finally said no they were not guiding lower, that it was a wide range, indicates to me they are sandbagging) -headcount should go from 23,000 to 30,000 (in line with growth rate, something I like to see) Other notes: - Fibre channel growth 84% - NAS 4Q 210 million - International growth higher than US growth for the first time (Asia/Pac huge, didn't write down the number) - more than 1/2 of revenues from new products in 2000 Again Laura from GS (she was a bit mean spirited) asked about Clarion which has gone to 80% direct from OEM model, can EMC still drive prices lower after this is accomplished, yes said MR, using prices as a sales tool. All in all, a great call and presentation, with slides. Tony, I suggest you at least review the slides as they tell the story of 2000. I don't know why they didn't have slides of guidance, would have been helpful. John