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Is EMC Broken?

The demigod has been pulled to Earth, and it shouldn't be a surprise that this mere mortal bleeds like anyone else.

EMC Corp.'s (NYSE: EMC) stock price in the past week has fallen to a five-year low, adjusted for splits. It's currently trading at around $4. EMC's market cap of around $8.9 billion values the company at just more than 33 times analysts' estimates for its 2003 earnings of 12 cents per share.

"The current [EMC] multiple compares to pre-bubble (prior to 1999) multiples of 10X and 35X," wrote A.G. Edwards analyst Shebly Seyrafi in a recent note to investors. The firm has maintained a Hold rating on EMC. Meanwhile, Mark Kelleher at First Albany Corp. last Friday downgraded EMC from Strong Buy to Neutral. "EMC has a strong franchise, and $2.50 per share in cash," he writes. But "without better confidence in the IT spending recovery, EMC stock will have difficulty appreciating, in our view."

Bear Stearns & Co. Inc. analyst Andy Neff suggests that EMC has lost its edge: "Some customers think EMC is still ahead but that the gap [between EMC and its competitors] is narrower than it was one/two years ago and are willing to consider other vendors," he wrote in a research note.

In other words, Wall Street is saying: The glory days are over in Hopkinton.

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