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Goldman Cites EMC, Bites Brocade

Companies in the storage space have improved their corporate governance, but some continue to lag in the quality of their financial reporting and the independence of their boards, according to a report from Goldman Sachs & Co.

In a note to clients this week, analyst Laura Conigliaro and colleagues at Goldman Sachs Research said the quality of corporate governance among firms in IT hardware space has generally improved since their first qualitative analysis last March (see Goldman Cites Dell, EMC, IBM).

The analysts single out EMC Corp. (NYSE: EMC) as "setting the standard," with financials that stand out for the amount and quality of detail provided. They say Dell Inc. (Nasdaq: DELL) is a close second, but needs to improve in some areas. The analysts say Dell confuses investors by shifting between presenting its storage product growth rates as overall figures and then as Dell/EMC ones, for instance.

Hewlett-Packard Co. (NYSE: HPQ) also gets kudos, though it's not in the top league with EMC and Dell, due to "lack of unit disclosure, customer segment detail, and detail on acquisitions."

Conigliario et al also single out Brocade Communications Systems Inc. (Nasdaq: BRCD) -- for a thrashing. They say Brocade lags behind others in the sector in financial transparency and board members' independence from company ties that could affect objectivity.

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