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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: EnricoPalazzo who wrote (50014)	1/24/2002 2:11:18 PM
From: Jacob Snyder	Respond to of 54805

Thank you. I don't exactly remember the "harsh words", but I probably deserved them.

To: EnricoPalazzo who wrote (50014)	1/24/2002 5:44:16 PM
From: Jacob Snyder	Read Replies (2) \| Respond to of 54805

EMC 4Q results and CC notes: Loss of 0.03, up from last quarter's loss of 0.43 (GAAP numbers). revenues 1.51B, up from (trough?) 1.21B last quarter, but way down from the record 2.62B in 4Q00. Margins 37%, up from 30% last quarter, but way down from the 2000 average of 58%. Change in gross margins has been largely due to change in revenues, as costs have remained (relatively) fixed. Anticipating "mid-40s" gross margins as the economy recovers. Headcount down to 20.1K, down from peak 24K; targetting 19K headcount by mid-2002. cash and ST investments 2.57B Inventories 584M, way down from last quarter's 866M. 2001 revenues 7.1B, compared to 8.7B in 2000 2001 loss of $0.23, compared to $0.79 profit in 2000. "Things feel better in the marketplace". "This is the first quarter in a while that we met our stated goals." "No significant additional pricing pressure this quarter, compared to a lot of pricing pressure in previous quarters. Price declines have levelled off." On 2/20, they will have a webcast presentation on Security and Disaster Recovery. --------------------- My comments: Last quarter looks like the trough in the fundamentals. After a series of quarterly declines, all the numbers looked better: sales, profits (sic), and margins. The P/S is now 5.2. That compares to the 1996 (pre-Bubble) P/S range of 1.5-3.8 Management seems fairly certain they've seen the bottom, but fairly uncertain about the slope of the upturn. They must be expecting to get a bigger % of corporate IT budgets, as they said they expect those budgets to be "flat-to-downish" in 2002, compared to 2001. YOY revenue decline of 42% (2.62B to 1.51B) for EMC, compares with 25% for NTAP (261M to 195M). Remember when EMC was supposed to be "immune" to macro events? In 2001, EMC did not act as I'd expect a Gorilla to act. Margins got chopped nearly in half, as management cut prices to maintain market share. Also, management doesn't seem to think there is any chance of getting margins above 50%, ever. This is disappointing, considering that NTAP had margins of 58% last quarter.