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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (32544)	9/11/1998 3:02:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Tip, a lot of this comes directly from The High Tech Strategist, but it is hardly new news. Fred just gathers things together very well and makes a nice bearish case. The main problem with growth is that EMC's customers are going into competition with them. Dell has a line of storage devices and so does Compaq, and they are sourced from companies other than EMC. Sun has a storage unit and HWP may be about to unveil one. Ex what Fred Hickey says, it all comes down to the natural movement in tech, and in many other, businesses. When the main product, whether it is pc boxes or DRAM or whatever is making big bucks, there is no reason to go after the related business. You can leave that to smaller cos. EMC fit into that niche. But, when you start to see cutthroat competition in your main business, and margins go into the toilet, you start finding the related businesses more attractive. That is why so many outsourcing firms have gotten, deservedly, wacked in the chip business. EMC is no Micron or Citicorp. It is a very good co. which knows what is going on in its field. However, when the Dells and Compaqs and Hewletts take aim at you, you usually have margin problems. And, a stock selling at 53 times eps cannot afford margin problems. On a timing basis, I expect EMC to do ok until the first of the year. They have contracts and a backlog of orders to carry them for awhile. They have had this kind of challenge before, from IBM, and beaten it, so the bulls will hold out the hope that they will again kick butt. But I want to emphasize that the cos. aligned against them now are not IBM. If there is no upturn in the box business, these cos. will slice at the pie until they get some market share. MB