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Goldman Cites Dell, EMC, IBM: Page 2 of 3

A raft of other companies wound up in the "middle of the pack," with varying levels of good corporate governance metrics that didn't stand out either way. Included in this bunch were Brocade Communications Systems Inc. (Nasdaq: BRCD), Emulex Corp. (NYSE: ELX), Hewlett-Packard Co. (NYSE: HPQ), Lexmark International Inc. (NYSE: LXK), McData Corp. (Nasdaq: MCDTA), Network Appliance Inc. (Nasdaq: NTAP), Seagate Technology Inc. (NYSE: STX), Storage Technology Corp. (StorageTek) (NYSE: STK), and Veritas Software Corp. (Nasdaq: VRTS).

Table 1: Goldman Sachs Research Rankings Distribution for Overall Corporate Governance

Leaders Middle of the Pack Laggards
Dell (DELL) Brocade (BRCD) Qlogic (QLGC)
EMC (EMC) Emulex (ELX) Sun (SUNW)
IBM (IBM) Hewlett-Packard (HPQ)
Lexmark (LXK)
McData (MCDTA)
Network Appliance (NTAP)
Seagate Technology (STX)
StorageTek (STK)
Veritas (VRTS)
Source: Goldman Sachs Research

Dell, EMC, HP, Sun, and Veritas consistently release all their financials at once, earning kudos. Dell, EMC, IBM, and Veritas also were praised for the quality of their supplemental disclosures. These include revenue breakouts by segment and product, acquired assets, geographic areas, customers contributing over 10 percent of sales, and units shipped.

When it comes to the mid-tier companies in the report, nearly all covered companies lack sufficient detail in their financial reporting, Goldman says. While HP releases a lot of supplemental information, for instance, it doesn't do so consistently quarter-to-quarter. Emulex and McData don't reveal how much they make in revenue from acquisitions. Qlogic does not provide a cash-flow statement. Sun and Qlogic skimp on product revenue breakouts and segment information.

Companies were also judged on actions they've taken to reduce employee stock options and equity-based compensation. Dell, EMC, Emulex, IBM, Lexmark, NetApp, and Veritas have reduced option grants the most, the report says. But Brocade has work to do, having granted nearly 17 percent of its outstanding fiscal year 2003 shares in the form of options.