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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (21038)	7/31/2001 11:06:32 PM
From: Cary Salsberg	Respond to of 24042

1. I don't think the EMC forecast reflected a cyclical trough. ML thinks hardware revenues and ASPs will suffer because of increased competition. 2. When a company uses debt, venture capital, and IPO capital to finance capital equipment it doesn't need, that is worse than using cash flow. But, a key part of bubble revenue is "doesn't need." I agree that the downturn will be shorter, but I don't agree with "return to the previous trendline." 3. The entire economy doesn't need to continue to buy the volume of storage with the rate of growth we saw. The impetus was the internet. The idea that everything needed to run on the internet, soon. 4. Corporate storage was attached to mainframes, minis, and servers. The SANs and Network Appliances are a paradyme shift. Growth rates accelerate during the shift, but revert to long term secular growth. The shift was aided by the bubble, rates grew even faster, and the long term secular growth will wait for a bubble adjustment. 5. 10% of revenue on R & D is about average. I don't see why storage revenue will return to 35% growth in a 3% economy. I don't like the industry. The ML report supported my belief that storage hardware continues to be a poor investment and that EMC is not likely to return to its former status. 6. I will not benefit in any way if what I say turns out to be accurate. I am being a devils advocate because I believe you are giving too much credit to the EMC track record without knowing what was really going on. 7. At the right price, I am more inclined to buy JDSU than EMC because I believe JDSU has had and will continue to have technological leadership while EMC has had primarily marketing leadership.