EMC Corporation - CEO - Interview
5/13/99 18:6
<Show: CNBC/DOW JONES BUSINESS VIDEO>
<Date: May 13, 1999>
<Time: 00:00:00>
<Tran: 051300cb.y52>
<Type: INTERVIEW>
<Head: EMC Corporation - CEO - Interview>
<Sect: Business>
<Byline: Tyler Mathisen, Sue Herera>
<Guest: Michael Ruettgers>
<Spec: Business; Computer Hardware Industry; EMC (New York Stock Exchange
);
SIC: 3577>
<Time: 00:00:00>
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT
BE IN ITS FINAL FORM AND MAY BE UPDATED.
CNBC-MARKET WRAP EMC (EMC) CEO MICHAEL RUETTGERS TELLS WHY THE COMPANY'S
STOCK IS UNDER PRESSURE MAY 13, 1999
TYLER MATHISEN, CNBC MARKET WRAP ANCHOR: Shares of computer component
company EMC (Company: EMC Corporation; Ticker: EMC; URL:
emc.com have been a under a lot of pressure this month after
Hewlett-Packard (Company: Hewlett-Packard Company ; Ticker: HWP ; URL:
http//www.hp.com/) , one of its biggest customers said it will likely stop
reselling EMC products in favor of products from Japan's Hitachi Data
Systems . Here's a one-year chart of EMC to look at. And you can see it had
a very, very nice run. Way up the alpine mountain, but it has fallen off a
little bit lately, though rallied in the last couple of days. Closed today
down 5, and it looks like 9/16. It had about 5 percent decline at 105
7/16. Michael Ruettgers is the chief executive officer at EMC and joins us
now from our Midtown Manhattan bureau. Mr. Ruettgers, so nice of to you
come by, thank you.
MICHAEL RUETTGERS, CEO, EMC CORPORATION: My pleasure, Tyler how are you
today?
MATHISEN: Great, great to have you with us. Tell us about the Hewlett-
Packard thing. How big a hit is that going to be to your company?
RUETTGERS: Well, we don't think overall it is going to be much of an impa
ct
at all. In the first quarter, they represented 13 percent of our revenue.
But Tyler, you need to understand that something like 90 percent of the
sales calls that HP makes are made in conjunction with our people. And then
once a product is sold to customer, we have been doing all of the
installations and all the servicing. So, we think that the relationships
that we have with the customers is very strong and that (ph) we won't see
any impact of this transition.
SUE HERERA, GUEST HOST: Mr. Ruettgers, the Street, however, is worried
about your ability to make up that gap. How can you reassure the Street
that really it isn't going to be that big a hit and it will be easy to make
up that gap?
RUETTGERS: Well, there is a couple things. So, one is that we're allowed
to sell directly. We can keep some of the margin that we give to Hewlett-
Packard. So we think overall, that those systems have our names on them,
those (ph) customers believe that they're EMC shops, so we're pretty
confident in this.
MATHISEN: There was some comments made about some of the architecture in
the EMC products, that there was a little older and that may have been one
reasons why Hewlett-Packard was looking elsewhere. How do you respond to
that?
RUETTGERS: Well, with great amusement in the fact is that the system that
they're going with now is made by Hitachi, who has been following us and I
think people would confirm that they are probably two years behind us. But
they've been doing exactly what we're doing. So their system has to be at
least three years older than ours.
MATHISEN: So, why are they going with them, then?
RUETTGERS: It is primarily a monetary thing. They believe they can make
more money selling an inferior product.
HERERA: Now part of the concern also about your company is fears of a
slowdown in regards to the Y2K slowdown in the second half of the year, is
that a legitimate concern on the Street's part or somewhat overblown?
RUETTGERS: No, I think that is clearly overblown, all discussions we've h
ad
with customers indicate that that won't happen, and even yesterday in Lou
Gerstner's comments to analysts, he didn't believe that IBM would see a
slowdown either, so I think it's way overblown.
MATHISEN: Has your stock been unfairly tarred? I guess would you say so.
RUETTGERS: I would. Yes, I would.
HERERA: On the other hand, it's had a stupendous run-up, I mean we were u
p
what over 230 percent according to the research that I'm looking at over
the past year. So you've given back what 30 percent from that? I mean some
would say that's just the law of gravity.
RUETTGERS: Yes--no, you may see some of that, we're up almost 30 percent
this year. On the other hand, you know, we've talked to people about going
from 4 billion in revenue last year to over 10 billion in revenue in 2001.
So, the growth opportunities are pretty significant with us and I still
think that there's value in what we do.
MATHISEN: Talk to us a little about the overall picture for the business
and the particular niche that you're in. Are you favorable looking out for
the rest of this year and into the year 2000?
RUETTGERS: Well, we're the leading provider of storage system, intelligen
t
storage systems. So, if you look at the phenomenon that's sweeping
everybody now, the Internet, the Internet is primarily a way to get access
to information. We're the best provider and storage provider of those kind
of things. So as the Internet grows, as customers look to do more with the
information, we're singularly in a position to take advantage that.
MATHISEN: Mr. Ruettgers, thanks so much for coming by.
RUETTGERS: My pleasure.
MATHISEN: It was great to have you with us. Michael Ruettgers, chief
executive officer at EMC, joining us today from Midtown Manhattan.
END |
