EMC's Murky Outlook
Last Thursday, chipmaker PMC-Sierra's (PMCS) Chief Executive Bob Bailey said "positive trends in our enterprise storage business" helped narrow the company's third-quarter loss.
"We're still bullish on the storage sector, and continue to hold shares of EMC," said Tony Trzcinka, a portfolio manager with Pax World funds. Pax also holds shares of hard-disk-drive maker Seagate (STX) and Network Appliance.
Trzcinka is not alone in his assessment of the storage industry's prospects. EMC shares have risen 77% this year, in part because of the torrid growth of the company's virtualization software subsidiary VMware (VMW), whose stock has more than tripled since its initial public offering in August.
Pax's Trzcinka will keep a close eye on EMC's core storage revenue and profitability to see if a slowdown in tech spending is affecting the company as it phases in new products. This will also show whether EMC has had to discount products in order to keep up sales, says Trzcinka.Discounting may help EMC gain market share in a weaker economy, says J. Hingorani, an analyst with Standard and Poor's. Because it can bundle storage gear with products from its RSA Security subsidiary, EMC can offer greater discounts across a range of products. That can keep the company in good graces with corporate IT managers who face budget freezes in a slowing economy.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV