A vital aspect of a company and a very telling statistic about a company is the company s stock price. EMC s domination in this area is overwhelming. As of Friday December 10th, 1999 EMC s stock price was $94.44. Lexmark is second at $75.86, Imation is currently at $30.81, Quantum at $23.19, and Storage Tech. is last at $18.19. EMC s high stock price reflects how well the company is doing and you could see how successful they are from our ratio analysis. They are industry front runners and there are no signs that anything is going to change. Their stock price rose 210 percent during 1998 and just continued to rise in 1999. EMC is the leader in the storage systems industry. A great reason for their success is attributed to their continuing production of new products. Almost 80 percent of EMC s revenue in 1998 came from products introduced in 1998.
EMC: Strategic Recommendations
After conducting our research on EMC it is evident that they are a highly profitable company and are far and away the leaders in their industry. However, we keep coming back to the question of whether or not their success will last. We feel that they have the ability to continue to succeed with some tampering of their current strategies.
A key recommendation we would make to EMC is for them to beef up their international sales staff. EMC has experienced tremendous success here in the United States and as international demand continues to increase EMC has to be able to meet expectations of foreign investors.
A key ingredient for EMC in their battle to stay a top the storage systems industry will be their ability to weather a price war. Right now t he demand for EMC open storage products is so strong that the company is able to charge twice as much as their competitors. However, it is believed that prices for open storage will begin to fall sharply as competition heats up. This could cloud EMC s prospects in much the same way that falling mainframe-storage prices in the mid-90 s caused EMC s stock to stall. One danger is the nimble new competitors at the low end of the market. Sales of storage systems for windows NT servers from companies such as Compaq Computer Corp. and Data General Corp., for example, should climb 34% annually for the next four years vs. 9.4% for the total storage market. Despite all this EMC appears better positioned than others to weather a price war. Falling prices are part of the computer storage industry and the lower prices could fuel demand for open storage.