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

To: Ruffian who wrote (6222)	5/4/1999 7:10:00 PM
From: Clifford T. Tanaka	Read Replies (2) \| Respond to of 17183

Regarding the merits of Hitachi's storage products: how do they stack up against EMC? In terms of competitors, I've always heard Sun, IBM, Dell thrown around, but not Hitachi. This fact and they're market share suggests they have inferior products (can any IT person provide the skinny on this?). In that case we have nothing to worry about - if HP wants to try and push inferior storage products rather than EMC, I don't think they'll have much luck. I have full confidence that EMC's sales team can eat HP's lunch if it came down to that. EMC holds the cards here - HP should have been content with the crumbs that EMC gave them ;-).

To: Ruffian who wrote (6222)	5/4/1999 9:25:00 PM
From: kendall harmon	Read Replies (1) \| Respond to of 17183

EMC--bloomberg after the close. EMC Falls 6.5% on H-P's Expected Agreement With Rival (Update3) (Closes share prices.) Hopkinton, Massachusetts, May 4 (Bloomberg) -- EMC Corp. shares fell 6.5 percent after the No. 1 maker of corporate computer-storage systems said it expects its largest reseller, Hewlett-Packard Co., to unveil plans tomorrow to sell devices made by EMC rival Hitachi Data Systems. EMC plunged 7 to 100 in trading of 20.1 million shares, making it the fifth-most active stock in U.S. markets. A person familiar with Hitachi's plans said that H-P will resell Hitachi's storage systems. H-P would neither confirm nor deny the arrangement. Hopkinton, Massachusetts-based EMC makes devices that companies use to store data like billing information and Internet sites, and the company said it's talked to H-P in recent weeks about the pending agreement with Hitachi. EMC gets about 13 percent of its revenue from Hewlett-Packard, and an H-P sales agreement with Hitachi might jeopardize that, analysts said. ''H-P is important to EMC,'' said Brian Goodstadt, an S&P Equity Group analyst, who rates EMC a ''buy.'' Still, Goodstadt said that EMC ''has nine other companies that also resell their machines.'' H-P's planned sales agreement with Hitachi was reported earlier today by the Wall Street Journal. H-P, the world's No. 2 computer maker, will hold a press conference tomorrow in New York to describe new storage products. Risky Hewlett-Packard resells EMC's soda-machine size storage devices with its high-speed computer servers, and H-P keeps a portion of those sales. In January, EMC and Hewlett-Packard extended their agreement, begun in 1995, to December 2001. The agreement has generated more than $1.3 billion in revenue for EMC, the company said. That agreement also has benefited H-P, and striking an arrangement with a company that EMC considers an archrival is risky, said Thomas Mancino, a Pacific Growth Equities analyst. ''Hewlett-Packard is shooting itself in the foot by risking its relationship with EMC,'' said Mancino, who rates EMC a ''strong buy.'' EMC spokesman Mark Fredrickson said EMC expects its agreement with Hewlett-Packard to continue, but a provision in the contract allows EMC to compete directly for H-P customers if H-P offers competitors' storage products that are over a certain size. He declined to give further details about H-P's pending agreement with Hitachi. ''We are prepared to go direct to the H-P space in a swift and aggressive manner'' if the contract is broken, Fredrickson said. Market Surges At stake is the corporate data-storage market, which is forecast to increase more than 71 percent to $31.1 billion in 2002 from $18.1 billion last year, according to market research firm International Data Corp. EMC estimates that its revenue will more than double to $10 billion by 2001 from almost $4 billion last year if the company maintains its estimated 35 percent share of the market, ahead of No. 2 International Business Machines Corp.'s 22 percent. Hitachi had about 7 percent of the market last year, according to Dataquest. EMC's Fredrickson reiterated the company's forecast for revenue growth of more than 30 percent this year and in 2000. On a conference call with analysts today, EMC said H-P's agreement with Hitachi would be ''neutral'' to its revenue this year, Goodstadt said. ''The impression they gave was that they have been preparing for this for quite a while,'' he said. Even though Hitachi's market share is small, EMC has said it considers the company to be a prime competitor because its hardware mimics that of EMC. At one time, H-P's business accounted for as much as 20 percent of EMC's revenue. That has declined as large corporate customers now go directly to EMC, Fredrickson said. EMC's devices have become smarter and now have significant computing power of their own. Seeing this shift, EMC has doubled the size of its sales and service workforce in the last year and a half, Fredrickson said. EMC's shares have been battered recently amid concern that customers may trim purchases later this year to deal with the Year 2000 computer glitch, which can cause some older machines to read dates incorrectly. With today's plunge, its shares have fallen 26 percent from a record 134 15/16 on March 30. Last year, it was the fourth-biggest gainer in the Standard & Poor's 500 Index, rising more than threefold.