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

To: Glenn Petersen who wrote (13309)	10/13/2001 5:53:52 PM
From: Gus	Respond to of 17183

It looks like they're still chewing on that IBM-EMC rumor. Maybe once they're through they want to look at the IBM-Siebel rumor too. ...EMC could also benefit from a merger: It struggles to integrate its storage products with networking equipment and software from companies outside its control; an IBM deal would simplify that process.... .....Within IBM, EMC engineers could steer changes in software such as Big Blue's DB2 database. With IBM's vast range of products, customers could rely on a single company instead of many. So far EMC has had no problem technically supporting any server, any operating system, any database, any application and any network because of its ability to forge customer-backed technical support agreements with even its fiercest rivals. For example, this year EMC will continue to sell more storage systems that support any combination of S390, IBM-AIX, Solaris, HP-UX and NT than IBM has sold for the last 6 years *combined.* I don't see how an IBM+EMC combination can do better, specially in the areas of servers, operating systems, databases and middleware where IBM competes directly with other vendors and EMC's neutrality carries more weight with customers. ....Proponents say the deal would also give EMC access to IBM's deep pockets--a major consideration as EMC shares hover near a 52-week low.... EMC has no debt and $4.9B in cash and marketable securities. IBM has $27B in ST/LT debt and only $3.8B in cash and marketable securities. EMC is free cash flow positive and has no need to tap the debt/equity markets for a long time so its stock price is not a factor at all. With $88B in sales, IBM is no longer a revenue growth story. In order to become a consistent earnings growth story like GE, it has to manage its balance sheet very well, including buying back its stock very aggressively. With $8B-$9B in sales, EMC is still a revenue and earnings growth story even though it is going to post its first quarterly loss in a long time.