Still Accumulate EMC

Also: Analysts' opinions on Advanced Micro and BMC Software

EMC Corp. (EMC ): Maintains 4 STARS (accumulate)

Analyst: Jim Corridore

EMC expects Q2 earnings per share in the range of $0.04-$0.06, on revenues of about $2 billion, sharply lower than the Wall Street consensus. EMC admits being impacted by the worsening global economy. Major customers are buying less and delaying the decision process. Gross margins are being impacted by the sales shortfall and lowered prices. S&P feels EMC's issues are entirely external, not company-specific. S&P believes EMC is well-positioned for an eventual recovery in information technology (IT) spending. S&P thinks investor should use today's price dip as an attractive opportunity to accumulate shares of the leading storage company.

Advanced Micro Devices (AMD ): Maintains 3 STARS (hold)

Analyst: Megan Graham-Hackett

The company preannounced a Q2 shortfall. AMD sees EPS of $0.03- $0.05 vs. the Wall Street mean estimate of $0.27. It also sees Q2 revenue down 17% vs. Q1 to $985 million, vs. its prior guidance of down 10%. The company cited weaker than projected flash memory sales and price pressures on microprocessors. S&P had felt the company's Q2 guidance for flash and average selling price in microprocessors was too optimistic, given Intel's public statements that it planned to take market share. S&P is cutting its 2001 ESP estimate to $0.85 from $1.50 on lower gross margins. At 18 times the $1.57 2002 estimate, S&P thinks the shares are reasonably valued.

BMC Software (BMC ): Reiterates 3 STARS (hold)

Analyst: Jonathan Rudy

BMC preannounced disappointing results for its June quarter. The company says revenues will be $338-$345 million, versus estimates of $355 million. EPS will be $0.06-$0.08, down from the company's prior guidance of $0.11-$0.14. Results were impacted by deferred business amid the economic slowdown, primarily in Europe. On a positive note, operating expenses will come in below S&P's expectations. And bookings were up $30-$35 million. With a healthy balance sheet, improvement in its order pipeline, and strong cash flow, S&P continues to recommend holding shares of this reasonably-valued software company.

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