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Technology Stocks : Son of SAN - Storage Networking Technologies -- Ignore unavailable to you. Want to Upgrade?

To: Gus who wrote (3688)	7/23/2001 4:59:47 PM
From: J Fieb	Read Replies (1) \| Respond to of 4808

IBM talks it up... IBM, a Longtime Prey for EMC, Attacks with Shark By Tim McLaughlin BOSTON (Reuters) - Smelling vulnerability at data-storage industry leader EMC Corp., executives at archrival IBM Corp. say their Shark storage machine is finally ready to be more predator than prey. Sales of the retooled Shark surged 55 percent to an estimated $350 million during the second quarter while EMC's (NYSE:EMC - news) information storage systems business shrank 19 percent to $1.22 billion. Shark's resurgence came amid steep price cutting in an industry rocked by a downturn in global tech spending. EMC blames the economy for the wound it suffered in the second quarter, but Linda Sanford, IBM's senior vice president of storage, said she sees things differently. ``We're gunning for leadership again,'' Sanford told Reuters in an interview. EMC executives discount such claims and point out that rival storage system makers do not release audited financial reports that break out storage revenue in detail. EMC Chief Executive Joe Tucci told analysts during a conference call last week that EMC continues to take business away from rivals. ``Our win-loss reports were excellent,'' Tucci said on the conference call. ``We replaced more IBM and Hitachi (storage systems) than they probably did in revenue.'' When introduced nearly two years ago, Shark stumbled in the marketplace with subpar functions as EMC's best-selling Symmetrix machine continued its decade-long romp over all comers. ``We bit the bullet, designed a whole new architecture and spent last year playing catch up,'' Sanford said. With speedier connections and improved software, Shark now is getting favorable customer reviews. ``While IBM sure took its time in getting Shark to market, Shark is growing increasingly strong competitively,'' Goldman, Sachs & Co. analyst Laura Conigliaro said in a recent note to investors. ``Customers we talk with increasingly place Shark in a comparable league with (Hitachi Data Systems') Lightning and EMC's Symmetrix, although we find very few customers actually using multiple vendors' boxes in production and EMC remains very entrenched,'' Conigliaro said. But as storage customers pay more attention to price, Conigliaro said IBM has upset potential. ``We believe that having come from nowhere 12 months ago, IBM could be headed toward a potential leadership position in storage, particularly given its services capabilities,'' Conigliaro wrote in her research note. EMC still holds a commanding lead over IBM for machines that store massive amounts of e-mail, medical images and computer network traffic. The company's sales force and customer support group also are considered to be the industry standard. The Hopkinton, Massachusetts-based company, however, is reeling from lowered expectations amid a downturn in global tech spending and stepped-up competition. EMC began the year with a forecast that revenue would grow 35 percent this year to $12 billion. The company, which last week declined to give a second-half outlook, is now on track to post revenue below last year's $8.87 billion. EMC's decade-long love affair with investors has soured, too, as its stock has dropped about 73 percent this year. IBM shares, meanwhile, are up 24 percent. ``I have to believe (EMC) is at the end of their architectural design point with (Symmetrix),'' IBM's Sanford said. ``You can only tweak the knobs so much before you really run out of gas.'' Introduced in 1991, EMC's Symmetrix is a symbol of success. EMC used the refrigerator-sized machine to overtake IBM as the king of storage and saw its stock climb more than 81,000 percent during the 1990s. EMC spokesman Mark Fredrickson said IBM has used four different storage designs since Symmetrix hit the scene. ``That's not because of innovation, but because of failure,'' Fredrickson said.