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

To: John Carragher who wrote (12988)	8/13/2001 6:03:13 PM
From: Fred Levine	Respond to of 17183

From SSB-- Company Update: > Positive storage announcement between Sun Microsystems and Hitachi > Yesterday, Sun Microsystems (SUNW) announced an agreement where they will > OEM Hitachi's storage products. SUNW will be an original equipment > manufacturer for Hitachi's Lightning high-end disk arrays (which is also > OEM'd by HWP) and will sell Hitachi's storage software. Hitachi will sell > SUNW's storage management software (High-ground, LSC). Going forward, the > two companies will also jointly develop multiple support centers > worldwide. While we are not taking our revenues estimates up for SUNW at > this time, we believe there is ample incremental revenue opportunities for > SUNW. Last year, SUNW sold 27,000 mid range servers and 1,900 high end > servers. Conservatively estimating that 15% of these servers will be > attached to a storage subsystem an average selling price of roughly > $250,000, this would imply over $1 billion. Details of any revenue > sharing agreements between SUNW and Hitachi were not released. > > Impact: In our view, this is a positive for SUNW and is another example > of a new product line with lots of opportunities. As SUNW grows their > storage business, this will also benefit QLogic (QLGC)who provides the > chips for their switches and HBAs (Host Bus Adapters). > > While this is certainly not positive for EMC, we do not believe this > further jeopardizes EMC's position as the number one storage company. As > this does raise the competition, we believe EMC continues to remain the > distinct leader with the best sales force, service, and software > expertise. Over the next one to two quarters, we believe there will be > limited upside for shares of EMC due to continued gross margin pressure > from new competition. However, looking forward several quarters, we > believe investors will reward EMC stock as management begins to regain > momentum and gross margins. > fred