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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (21558)	7/29/2004 3:35:44 PM
From: Logain Ablar	Respond to of 57684

Storage is a huge space in the IT world but that doesn't mean there is still not excess capacity driven from the late 90's boon and accelerating changes to the underlying technology. As an example EMC is on track to set record revenues next year (if it hits its sales forecasts) but its current share price is 10% of its 2000 peak. In 2000 both Hitatchi and IBM started killing it with competing hardware. EMC has been morphing into a software provider trying to take share from VRTS. Lets also not forget valuations. In 2000 emc's peak valuation was around $225 billion ($104 * 2.2B shares) and I think the company was forecast to earn $1 share that year (I think earnings peaked @ 20 cents a share in the 3rd qtr as IBM price cutting then started to take its toll)or around 100x current year earnings. Today its valuation is around $25 billion ($10.5 * 2.4B shares) and I believe the company is forecast to earn around 35 cents or around 30x current year earnings (they earned 6 cents in the 1st qtr) on a sales growth forecast of 35%. So valuations appear in line for a cycical growth stock. Now if the cycle has peaked and the earnings peak in the next two quarters (emc has revenue continuing to grow but if we hit another recession that won't happen) the multiple comes down again (and now its gaining a greater share of revenue from software than 3 years ago). I actually don't think they've peaked as I have a recession late next year or 2006 (but of course circumstances can accelerate this and ocassionaly I have been know to be just plain wrong) ORCL is argueably the data base software king but IBM has actually been taking share on the high end and MSFT is attacking from the low end. BRCD has been and is still the leader in FC switches but MCDTA still commands the director space and CSCO is taking share from both. I don't know where this stands but CSCO's chart looks a heck of a lot better than BRCD or MCDTA. ELX is the fiber channel hba leader but it and qlgc's charts have been warning for months to get out and stay away (both are due for a bounce but elx warned of lower sales this qtr, which i attribute to europe but i really don't know why). Seagate is the leader in the hard drive space but it has its own issues on its stock price and maxor and wd make good competing products (as well as the ibm venture with hitachi). Personally I believe there is a fundamental technological shift going on in the space as well as an issue with excess capacity. I say this only by looking at the charts with some reading on technological advances in ethernet, hard drives and flash.