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

To: Chien Pai Wang who wrote (13762)	1/22/2002 6:34:09 PM
From: Gus	Respond to of 17183

do you know what % of revenues coming hardware? The trend since 1995 -- when Software (<$25M) and Services (<$70M) accounted for less than 5% of Sales ($1.9B) -- is that Hardware continues to gradually trend down while Software and Services continue to gradually trend up as percentages of Sales. 3Q01 was a shortened quarter and probably not that meaningful so EMC's medium-term guidance of Hardware (55%), Software (30+%) and Services (15+%) by 2003 still holds. Hardware margin is definitely an issue that EMC will address in the next few quarters when their cost-cutting measures start to take effect. EMC attributed 12 of the 17 point drop in Gross Margin from 2Q01 to 3Q01 to the drop in sales volume and only 5 points to pricing pressure. High-end pricing pressures are expected to ease this year so if you take that at face value, the gradual return of sales volume and the streamlined operations should make EMC's earnings power more visible. EMC Last 7 Quarters 1Q00 to 3Q01 Hardware Software Services Others* Total 1Q2000 70% 15% 6% 9% $1.8B 2Q2000 71% 16% 6% 7% 2.1B 3Q2000 72% 15% 7% 6% 2.3B 4Q2000 69% 18% 8% 5% 2.6B 1Q2001 67% 20% 10% 3% 2.3B 2Q2001 61% 25% 11% 3% 2.0B 3Q2001 56% 20% 20% 4% 1.2B 4Q2001 - - - - - *Data General's server business