ABN Amro Downgrades EMC to 'Hold'

Analyst Bill Shope says the information-storage firm's too-low prices will cut deeply into gross margin

ABN Amro downgraded EMC Corp. (EMC ) to hold from buy.

Analyst Bill Shope says he's significantly changed his view on EMC's story, and is downgrading the stock for two reasons. First, he thinks EMC's pricing strategy is not aligned with the current dynamics of storage demand. He believes EMC's current strategy will generate temporary market share gains with permanent gross margin losses. Second, he says the lack of visibility is disconcerting, adding that EMC declined to give Q3 and Q4 targets and would only say that Q3 would be worse than Q2.

Shope cut the $0.41 2001 EPS estimate to $0.31, and cut the $0.66 2002 estimate to $0.43.

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