Downgrade to EW on Slowing Storage Growth

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January 10, 2013

EMC Corp.
Downgrade to EW on Slowing Storage Growth
Near-term, weak enterprise demand leads us to cut our 4Q12 EPS by $0.01, which combined with l-t uncertainty from flash and cloud disruptions shave $0.10 off our 2013 EPS. EMC remains our preferred storage vendor with a strong product portfolio and margin expansion, but we see less upside in 2013.
Also reducing multiple expectations. The weak near-term demand and less certainty around the long-term growth of enterprise storage also makes multiple expansion less likely near-term, a key element of our prior OW thesis. Our new base case of $26 (down from $35) applies a 14x P/E multiple, in line with EPS growth, to our lowered CY13 EPS estimate of $1.85 (vs. $1.95 previously and below consensus of $1.91). While there could be further downside to our model if storage growth remains weak throughout 2013, EMC’s software portfolio adds roughly 500bps revenue growth and 200bps gross margin expansion annually, which provides a floor to estimates.
Weak enterprise storage demand. While C4Q turned out to be challenging for hardware in general, our channel checks suggest storage experienced the largest negative change on the margin. Our contacts attributed most of the shortfall to indecision in the face of alternative storage solutions and a tight budget environment. We continue to view EMC as a share gainer, but in a slower growth market.
Evolving storage architectures could slow revenue growth. While EMC is out in front of many of the emerging trends including cloud, flash, and deduplication, in aggregate these could pressure EMC’s legacy product lines which account for over 1/3 of revenue. We discuss this theme in our 2013 annual outlook published today, Sticking with Growth in 2013. We now expect 5% Y/Y storage revenue growth in 2013, down from 9% previously and flat with 5% growth in 2012. EMC’s traditional SAN storage business saw the largest cut where we model 2% growth (down form 7%).

MORGAN STANLEY RESEARCH NORTH AMERICA

Morgan Stanley & Co. LLC

Katy L. Huberty, CFA
Kathryn.Huberty@morganstanley.com +1 212 761 6249
Scott Schmitz
Scott.Schmitz@morganstanley.com +1 617 856 8074

Stock Rating
Equal-weight

Industry View
In-Line

Key Ratios and Statistics Reuters: EMC.N Bloomberg: EMC US
Systems and PC Hardware / United States of America Shr price, close (Jan 9, 2013)
Mkt cap, curr (mm) 52-Week Range
Exhibit 1
EMC Estimate Change Summary

$24.02 $53,156 $30.00-21.74

Revenue
Revenue Growth % Consensus Growth %
Growth Margin % Operating Margin %
EPS Consensus EPS P/E Multiple BaseCase

$5,916 6.1% 7.3%
64.9%
26.7%
$0.51 $0.52

$6,003 7.7%
65.2% 26.9%
$0.52

$23,307 7.9% 9.2%
64.6%
24.7%

$24,020 10.8%
64.7% 25.2%
$1.95

4Q
New Old

2013
New Old

$1.85 $1.91 14.0x

18.0x $26 $35

Source: Company data, Morgan Stanley Research
Storage Reseller Conference Call: January 11, 2013 at 11:00 AM EST *Toll-Free Dial-in #: (888) 336-3488 *International Dial-in #: (702) 928-6461 Conference ID #: 86875837

Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.
For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.

Risk-Reward Snapshot: EMC Corp. (EMC,

$35 30 25 20 15 10 5
0
Jan-11 Jul-11
Base Case (Jan-14)

$32.00 (+33%)

MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.
Equal-weight)

$ 24.02 $26.00 (+8%)

$20.00 (-17%)

Jan-12 Jul-12 Historical Stock Performance

Jan-13

Jul-13
Current Stock Price WARNINGDONOTEDIT_RRS4RL~EMC.N~

Jan-14

Bull Case $32

16x P/E on consolidated CY13 non-GAAP EPS of $2.00
14x P/E on consolidated CY13 non-GAAP EPS of $1.85
12x P/E on consolidated CY13 non-GAAP EPS of $1.70

Storage grows in the mid-single digits in 2013 while evolving architectures cloud long-term growth rates. We model 5% storage growth in 2013, inline with the 5% growth in 2012. On a consolidated basis, we model 8% revenue growth and 11% earnings growth in 2013. We apply a 14x P/E multiple to our consolidated CY13 EPS of $1.85. On a sum-of-the-parts basis, this implies an 8x P/E multiple on the core Information Infrastructure business, which is inline with the 6-12x historical range.
Storage grows low-single digits in 2013 as emerging solutions pressure growth sooner than expected. We apply the market multiple of 12x to EMC’s consolidated CY13 non-GAAP EPS (roughly flat Y/Y), to account for in line growth with the overall market.

Investment Thesis

• Weak enterprise storage demand in the near-term and potential longer-term disruption from evolving storage architectures could pressure storage growth estimates and limit multiple expansion.
  
• Withinstorage,EMCremainsrelatively well positioned with a strong product portfolio and leading, high-margin solutions in emerging categories.
  Key Debates
  

• Is the recent storage slowdown secular or cyclical? Mostly cyclical, but l-t threats loom. We continue to expect storage will outgrow other hardware sectors, but evolving storage architectures, including flash-based storage and cloud storage, could pressure growth rates l-t. Compression technologies also reduce the required disk storage systems, which make up around 50% of EMC revenue.
  
• Can EMC continue to expand gross margins? Modestly. The increasing mix of revenue from VMW, Data Domain, and Isilon (28% of rev) should drive 200 bps of a margin tailwind, which can help offset reduced operating leverage if core growth slows.
  Potential Catalysts
  • New product lines and acquired assets drive growth and margin improvement. • Product refresh expected in May 2013.
  • Expanded distribution.
  • Full value of VMW realized.
  Investment Risks
  • Macro weakness negatively impacts enterprise IT spending.
  • Increased competition pressures pricing and win rates.
  • New storage paradigms lower traditional disk system growth. • Lower than expected software
  revenues could increase weight of
  lower-margin hardware business. • Acquisitions fail to drive growth.
  

Storage growth returns to double digits as near-term weakness proves to be cyclical. Total operating margins expand 100 bps due to mix and operating leverage. We apply a 16x P/E multiple to our CY13 bull case EPS of $2.00, which implies a PEG of 0.8x. On a sum-of-the parts basis, this implies a 10x multiple on the core Information Infrastructure business, which is inline with the 6-12x historical range.

Base Case $26

Bear Case $20

Source: Thomson Reuters, Company Data, Morgan Stanley Research

2

MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.
Evolving Storage Architectures Cloud the Growth Outlook

Summary & Conclusions
EMC continues to be our preferred name in the storage market, but we see limited upside over the next year due to near-term demand weakness and disruption from evolving cloud, flash, and efficiency solutions. We expect uncertainty around the long-term growth rate of storage to limit multiple expansion. As a result, we see less share price upside and move to an Equal-weight rating.
Weak near-term demand
Storage demand came in below expectations for most of our reseller contacts due to a broad array of concerns that include budget issues, slow decision-making processes, and indecision due to the number of alternative solutions in the market. Several of our contacts described 4Q as “terrible” and some said they missed their plans by as much as 20%. A few smaller resellers noted a more normal environment, but this view appears skewed by a few larger deals.
Demand weakened across all vendors, but on a relative basis, resellers continue to view EMC more positively because its solutions cater to end users. Projects that solve a specific business need have an easier time gaining CIO approval than general IT purchases. Our reseller contacts continue to highlight EMC as the best vendor at crafting a solutions-oriented message that appeals to customers. We did not pick up much change in the competitive tone between EMC and NetApp and the initial read on demand from NetApp’s recent 3000 series refresh appears only modest.
As expected, our reseller contacts remain optimistic about storage demand next year although most only expect growth rates consistent with 2012, which is in-line with our lowered forecast. Many expect the recent weakness will continue into C1H13, but are hopeful demand picks up in C2H13 as data growth continues at a rapid pace. Enterprise flash continues to gain interest and adoption, but resellers do not believe it’s having a material impact on traditional storage system sales. Though, we’d point out that most of the adoption is in hyperscale data centers (like Facebook) and large enterprise accounts that don’t buy form the channel. While EMC participates in enterprise flash, Fusion-IO is the most commonly referenced vendor by our channel contacts.
Evolving storage architectures and solutions could pressure traditional storage growth rates
The fundamental drivers of data creation remain robust, but evolving storage architectures (cloud and flash) and increasing

adoption of efficiency solutions (de-duplication and compression) are changing the amount of traditional enterprise capacity shipped. Device proliferation, social media, video, machine-generated data (sensor, log, and click-stream), and legal/regulatory requirements are just a few of the primary trends that continue to generate large volumes of data. Yet, enterprise storage capacity is slowly beginning to decelerate with most forecasts calling for ~40% annual growth over the next several years, down from ~50% previously.
Non-traditional storage is making headway. Of particular concern for enterprise storage vendors is the fact that more enterprise storage capacity was consumed through non-traditional storage OEMs (direct HDD purchases, system integrators, and distributors) than traditional enterprise storage systems offerings (like those from EMC and NetApp). What’s more, the non-traditional storage market is growing over 30 points faster, according to IDC (Exhibit 2). For more details see our 2013 annual outlook, Sticking with Growth in 2013, which was also published today.
Exhibit 2
Large data center adoption of flash storage and broader adoption of cloud storage drives demand away from traditional Enterprise-class storage OEMs

160
140
120
100

80 60 40 20
-
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

	2011-2015 CAGR Enterprise Storage System Capacity: 39 % Structred: 23% Unstructured: 47% Non-OEM Enterprise Storage Capacity: 70%

Enterprise System Capacity Non-OEM Enterprise Capacity

Note: Forecast is from IDC
Source: IDC, Morgan Stanley Research
Slower storage growth limits multiple expansion
We reduce our C4Q and 2013 revenue and EPS estimates due to the weak near-term demand and uncertainty around the long-term growth of enterprise storage. EMC’s traditional SAN storage business saw the largest cut where we model 2% growth down form 7% previously. In total, we model 5%

3

Exabytes (EB)

storage growth in 2013, down from 9% previously and flat with 5% growth in 2012. Our new C13 EPS estimate of $1.85 (down from $1.95) implies 11% earnings growth (down from 17%). We expect the reduced growth rate and lower visibility to limit multiple expansion, which we previously assumed in our overweight thesis. We expect EMC to trade towards the low-end of its historical 13-19x range. Our $26 base case applies a 14x P/E multiple to the consolidated EMC forecast in CY13.
Exhibit 3
Estimate revision drives consolidated P/E multiple to low-end of five year range

MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.
Exhibit 4
EMC base case of $26 implies 8x multiple on core EMC business

1/4/2008 4/4/2008 7/4/2008

10/4/2008 1/4/2009 4/4/2009 7/4/2009

10/4/2009 1/4/2010 4/4/2010 7/4/2010

10/4/2010 1/4/2011 4/4/2011 7/4/2011

10/4/2011 1/4/2012 4/4/2012 7/4/2012

10/4/2012 1/4/2013

Aug-07 Nov-07 Feb-08 May-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12

EMC Core Information Infrastructure

VMW

25 P/E 22
19
16
13 10

Revenue Growth

EPS Growth 30% 20% 10%
0% -10% -20% -30% -40%

16.0x
14.0x
12.0x
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x

100.0x
80.0x
60.0x
40.0x
20.0x
0.0x

EMC Core P/E NTM

VMW P/E NTM

Source: Thomson Reuters, Morgan Stanley Research

Source: Thomson Reuters, Morgan Stanley Research
Where we could be wrong:

Morgan Stanley is acting as financial advisor to Seagate Technology plc ("Seagate") in connection with its exclusive agreement with LaCie Group S.A. ("LaCie") to acquire a controlling interest in LaCie, as announced on May 23,
2012. Following the receipt of the customary approvals and the close of this transaction, Seagate would commence a tender offer to acquire the remaining outstanding shares of LaCie in accordance with the General Regulation of the French Autorité des Marchés Financiers.
This report and the information provided herein is not intended to (i) provide advice with respect to whether to tender LaCie shares, (ii) serve as an endorsement of the proposed transactions, or (iii) result in the procurement or exchange of a security by a security holder.
Seagate has agreed to pay fees to Morgan Stanley for its financial services that are contingent upon the consummation of the proposed transaction. Please refer to the notes at the end of the report.

On a sum of the parts basis, our new $26 EMC base case implies EMC’s core Information Infrastructure business trades at 8x on CY13 EPS, up from 7x currently, assuming no change to VMW (VMW is covered by Adam Holt). EMC’s core Information Infrastructure business has traded between 6-12x since EMC spun out part of VMW over five years ago (Exhibits 4 & 5). If VMW reaches Morgan Stanley software team’s $120 price target, the core EMC business would be valued below the historical range based on our $26 base case. This would likely prove conservative in light of EMC’s strong product portfolio and mix benefit from higher margin assets that could boost earnings growth. In addition, major architecture changes usually happen slower than expected in large enterprise environments.

4

MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.

Exhibit 5
EMC Sum of the Parts Analysis

Revenue Growth CY13 EBIT Margin (non-GAAP) FCF/Revenue
EV/Sales EV/FCF P/E
Current Price
Information Infrastructure
Revenue Growth
EBIT Margin (non-GAAP) FCF/Revenue
Price Contribution to EMC EV/Sales
EV/FCF
P/E
Virtual Infrastructure
Revenue Growth
EBIT Margin (non-GAAP) FCF/Revenue
Price Contribution to EMC VMW Price
EV/Sales
EV/FCF
P/E

EMC Current

1.9x
8.3x 13.0x
$24.02

EMC Base Case

Peer Comparisons

EMC Consolidated

IBM NTAP ORCL

7.9% 24.7% 22.7%
Implied Price
2.0x $25
9.0x $26 14.0x $26

1.6% 22.7% 18.1%
2.3x 12.6x 11.7x

5.2% 5.6%
9.9% 48.3% 17.3% 39.0%
1.2x 3.9x
6.7x 10.0x 13.9x 11.9x

PT $26

NTAP TDC

$9.18 0.9x 4.2x 6.9x

5.2% 22.3% 20.1%
$6.50 0.6x 3.1x 4.9x

5.2% 11.7%
9.9% 25.5% 17.3% 15.9%
1.2x 3.5x
6.7x 22.1x 13.9x 20.3x
CRM CTXS RHT

$14.84 $94.87
6.9x 17.5x 28.3x

18.2% 32.6% 39.3%
$19.19 $120.00
PT based on 23x CY13 EV/Adj. FCF + $9 cash

28.8% 12.5% 18.0%
6.1x 34.0x NM

13.9% 25.8% 26.1%
4.0x 15.3x 22.3x

16.5% 25.3% 29.0%
6.3x 21.7x 41.1x

Note: VMW, CRM, CTXS, and RHT are covered by Adam Holt
Source: Company data, Thomson Reuters, Morgan Stanley Research. E = Morgan Stanley Research estimates

5

MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.

Exhibit 6
EMC Income Statement

($ in millions)

2012E

2013E

Fiscal Year

Mar-13 Jun-13 Sep-13 Dec-13

2009A 2010A 2011A 2012E 2013E

Revenues
Storage
Content Management & Archiving Security
VMware
Product Revenue Services Revenue
Cost of revenues
Storage
Content Management & Archiving Security
VMware
Corporate Reconciling Items
Gross Profit
Gross Margin % (GAAP)
Storage
Content Management & Archiving Security
VMware
Corporate Reconciling Items
Product Gross Profit
Gross Margin %
Services Gross Profit
Gross Margin %
Operating Expenses
SG&A
Research and Development

Mar-12 Jun-12 Sep-12 Dec-12

5,094.4
3,688.9 145.6 206.5 1,053.4
3,068.9 2,025.5
1,981.2
1,629.0 55.9 73.2 128.2 94.9

5,311.4
3,817.2 152.8 220.8 1,120.6
3,178.7 2,132.7
1,987.8
1,638.1 50.4 65.4 136.6 97.2

5,278.2
3,762.8 158.0 226.9 1,130.5
3,084.4 2,193.7
1,990.6
1,625.9 50.5 81.3 135.6 97.3

5,916.4
4,192.6 189.7 260.5 1,273.6
3,602.2 2,314.2
2,177.9
1,785.2 66.4 85.9 140.5 99.8

5,429.8
3,808.1 141.6 236.3 1,243.9
3,177.6 2,252.3
2,079.9
1,705.5 51.0 80.3 146.6 96.5

5,690.7
3,947.2 154.7 252.6 1,336.2
3,332.6 2,358.0
2,127.2
1,729.4 55.7 85.9 153.6 102.7

5,733.4
4,001.7 160.3 240.1 1,331.4
3,328.0 2,405.4
2,127.0
1,732.3 57.7 79.2 153.9 103.9

6,452.7
4,469.5 192.0 289.1 1,502.1
3,902.4 2,550.3
2,330.6
1,891.4 69.1 95.4 164.6 110.0

14,025.9
10,659.4 739.6 606.0 2,021.0
8,828.1 5,197.8
6,268.5
5,256.7 274.8 186.5 316.3 234.3

17,015.1
12,699.1 735.9 729.4 2,850.7
10,892.9 6,122.3
6,984.1
5,836.4 258.2 221.6 425.2 242.7

20,007.6
14,714.2 702.4 828.2 3,762.9
12,590.7 7,416.8
7,772.3
6,414.3 251.0 291.4 533.3 282.3

21,600.3
15,461.5 646.0 914.7 4,578.1
12,934.2 8,666.1
8,137.4
6,678.3 223.2 305.8 540.9 389.2

23,306.6
16,226.5 648.5 1,018.1 5,413.4
13,740.5 9,566.0
8,664.7
7,058.6 233.5 340.9 618.7 413.1

3,113.2
61.1%
2,059.9 89.6 133.4 925.2
(94.9)
1,767.3
57.6%
1,345.9
66.4%
2,238.0
1,650.2 587.8

3,323.6
62.6%
2,179.1 102.3 155.4 984.1
(97.2)
1,900.6
59.8%
1,423.0
66.7%
2,372.6
1,716.7 655.9

3,287.5
62.3%
2,136.9 107.5 145.6 994.9
(97.3)
1,791.7
58.1%
1,495.9
68.2%
2,361.7
1,708.8 652.9

3,738.5
63.2%
2,407.4 123.3 174.5 1,133.1
(99.8)
2,522.2
1,871.4 650.8

3,349.9
61.7%
2,102.6 90.6 155.9 1,097.3
(96.5)
2,438.0
1,775.6 662.4

3,563.5
62.6%
2,217.8 99.0 166.7 1,182.6
(102.7)
2,543.7
1,838.1 705.6

3,606.4
62.9%
2,269.4 102.6 160.8 1,177.5
(103.9)
2,568.6
1,851.9 716.7

4,122.1
63.9%
2,578.1 122.9 193.7 1,337.5
(110.0)
2,768.2
2,032.6 735.6

Income from Operations (PTOP)
PTOP Margin

Total Interest Income (expense), net
Interest and Other Income
Interest Expenses
Other Non-Operating Income/ (Expenses)
Operating Income Before Taxes
GAAP Income Tax Provision Recurring Tax Provision
Effective Tax Rate
Minority Interest
Operating Net Income
Operating Net Income Margin
Add Interest on dilutive Convertible debt Numerator for Diluted EPS
Reported Income Before Taxes
GAAP Net Income
Non-GAAP Net Income
Fully-diluted EPS
EPS - GAAP (Adjusted)
EPS - Reported
EPS - excl. ESO and Amort. Of Intangibles
Period Ending Outstanding Shares Avg Shares (Basic)
Avg Shares (Fully Diluted)

875.2 951.0 925.8 1,216.4
17.2% 17.9% 17.5% 20.6%

(32.4)
29.5 18.2 (43.7)
842.8
190.9
197.0
23.4%

(35.7)
26.0 18.5 (43.1)
915.4
214.3
229.3
25.0%

(54.7)
29.9 21.5 (63.1)
871.2
185.4
188.0
21.6%

(67.6)
29.0 21.4 (75.2)
1,148.7
229.7 232.5 20.2%

911.9 1,019.7 1,037.8 1,353.9
16.8% 17.9% 18.1% 21.0%

(42.4)
29.2 22.0 (49.7)
869.5
173.9 179.3 20.6%

(41.6)
31.7 22.0 (51.4)
978.1
195.6 201.0 20.6%

(50.8)
34.7 19.8 (65.7)
987.0
197.4 202.8 20.5%

(63.6)
37.7 19.8 (81.6)
1,290.3
258.1 263.5 20.4%

1,591.8 2,767.7 3,606.1 3,968.4 4,323.4
11.3% 16.3% 18.0% 18.4% 18.6%

39.1 40.2 32.7 38.7

606.7 645.8 650.5 877.6
11.9% 12.2% 12.3% 14.8%
----

586.8 649.5
777.8 863.8
586.8 649.5 818.0 866.7
$0.28 0.29 $0.27 0.29 $0.37 0.39
2,099.7 2,098.7 2,067.8 2,096.4 2,201.9 2,207.7

626.3
811.8
626.3 881.3
$0.29 $0.28 $0.40
2,106.7 2,104.2 2,210.4

853.3
1,083.0
853.3 1,121.9
$0.40 $0.39 $0.51
2,103.7 2,105.2 2,204.1

40.8 43.8 44.4 48.3

(65.5)
140.4 182.5 (23.5)
1,526.2
252.8 233.1 15.3%
33.0
1,260.1
9.0%

(75.3)
142.5 178.3 (39.5)
2,692.4
638.3 565.7 21.0%
71.3
2,055.4
12.1%

(241.7)
129.2 170.5 (200.5)
3,364.4
640.4 646.8 19.2%
148.0
2,569.6
12.8%

(190.4)
114.2 79.6 (225.1)
3,778.0
820.3 846.6 22.4%
150.7
2,780.7
12.9%

(198.4)
133.4 83.4 (248.4)
4,125.0
825.0 846.6 20.5%
177.3
3,101.0
13.3%

649.4 733.3 739.8 978.5
12.0% 12.9% 12.9% 15.2%
----

627.8 711.6
801.7 907.2
627.8 711.6 884.8 972.4
$0.29 $0.33 $0.28 $0.32 $0.40 $0.44
2,101.9 2,100.2 2,102.8 2,101.1 2,204.3 2,203.7

718.1
915.5
718.1 980.2
$0.34 $0.33 $0.45
2,098.4 2,099.3 2,202.1

956.9
1,214.9
956.9 1,225.5
$0.44 $0.43 $0.56
2,096.4 2,097.4 2,200.3

1,088.1
1,495.3
1,088.1 1,858.4
$0.61 $0.53 $0.90
2,052.4
2,022.4 2,055.1

1,900.0
2,690.7
1,900.0 2,715.4
$0.96 $0.88 $1.26
2,069.1
2,056.0 2,147.9

2,461.3
3,101.7
2,461.3 3,380.5
$1.15 $1.10 $1.52
2,048.9
2,055.5 2,229.1

2,716.0
3,536.3
2,716.0 3,689.6
$1.26 $1.23 $1.67
2,103.7 2,093.4 2,206.0

3,014.4
3,839.4
3,014.4 4,080.1
$1.41 $1.37 $1.85
2,096.4 2,100.2 2,202.6

-----

7,757.4
55.3%
5,402.7 464.8 419.5 1,704.7
(234.3)
6,165.6
4,538.1 1,627.5

10,031.0
59.0%
6,862.7 477.7 507.8 2,425.5
(242.7)
7,263.3
5,375.3 1,888.0

12,235.2
61.2%
8,299.9 451.4 536.8 3,229.5
(282.3)
8,629.2
6,479.4 2,149.8

13,462.9
62.3%
8,783.2 422.8 608.9 4,037.3
(389.2)

14,641.9
62.8%
9,167.9 415.1 677.2 4,794.8
(413.1)

9,494.5 10,318.5
6,947.0 7,498.1 2,547.5 2,820.4

Source: Company data, Morgan Stanley Research

6

MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.

Exhibit 7
EMC Income Statement Analysis

($ in millions)

Security VMware

Security VMware

Operating Expenses PTOP Margin

Net Income ModelWare EPS

Security VMware

Net Income ModelWare EPS

61.1% 62.6%
55.8% 57.1% 61.6% 67.0% 64.6% 70.4% 87.8% 87.8%
57.6% 59.8% 66.4% 66.7%
32.4% 32.3% 11.5% 12.3% 43.9% 44.7% 30.0% 30.2% 17.2% 17.9% 16.5% 17.2% 11.9% 12.2%
63.0% 64.4% 23.2% 24.0%
56.5% 58.1% 20.8% 22.1%
87.8% 87.8% 32.5% 31.2%
100.0% 100.0%
72.4% 71.9% 2.9% 2.9% 4.1% 4.2%
20.7% 21.1%

62.3% 63.2%
56.8% 57.4% 68.1% 65.0% 64.2% 67.0% 88.0% 89.0%
58.1% 68.2%
32.4% 31.6% 12.4% 11.0% 44.7% 42.6% 27.4% 31.0% 17.5% 20.6% 16.5% 19.4% 12.3% 14.8%
64.1% 64.9% 24.3% 26.7%
57.6% 58.2% 22.2% 25.2%
88.0% 89.0% 31.9% 32.0%
100.0% 100.0%
71.3% 70.9% 3.0% 3.2% 4.3% 4.4%
21.4% 21.5%

10.6% 9.6%
7.5% 7.3% -9.2% -9.8%

6.0% 6.1%
3.0% 3.0% -7.8% -5.7%

2012E

18.5% 12.6% 5.6% 7.2% 25.0% 21.7% 20.2% 20.3%

15.3%
10.8% -9.4% 41.4% 29.3%
10.3% 17.1% 12.0% 24.8% 29.4% 22.1% 25.2%

12.8%
9.7% -3.8% 15.8% 24.8%
8.9% 21.7% 12.2% 14.3% 13.9%
9.0% 11.9%

7.2% 6.1%
3.1% 1.1% -0.8% -10.4% 0.3% 7.0% 22.8% 23.8%
5.9% 4.3% 19.1% 16.1% 9.3% 7.1% 2.3% 4.2% 4.5% 6.7% 4.4% 2.4% 4.2% 1.4%

-8.6% 4.3% -0.6% 12.1%

-9.4% 3.5% -1.4% 11.4% -27.7% 5.0% 3.4% 20.1%

-15.0% 6.9% 2.8% 14.8% -0.5% 6.4% 0.9% 12.7%

-11.6% 6.8% -13.5% 5.8% -34.8% 14.2% -18.2% 16.5%
1.0% 6.4%
-8.1% 4.0% 4.8% 11.6% -5.0% 6.0% -25.1% 8.7% -21.7% 8.6% -29.2% 6.5% -29.8% 6.2%
72.4% 71.9% 2.9% 2.9%

-1.1%
-1.9% 5.1% -6.3% 1.1%
-0.5% -0.5% -0.5% -2.6% -4.8% 0.7% 0.6%
71.3% 3.0%

13.7%
12.7% 14.7% 19.8% 13.9%
9.5% -0.3% 6.8% 31.4% 31.9% 34.9% 35.3%
70.9% 3.2%

4.1% 4.2% 4.3% 4.4% 20.7% 21.1% 21.4% 21.5%

61.7% 62.6%
55.2% 56.2% 64.0% 64.0% 66.0% 66.0% 88.2% 88.5%
32.7% 32.3%
12.2% 12.4% 44.9% 44.7% 28.6% 31.3% 16.8% 17.9% 16.0% 17.2% 12.0% 12.9%
63.5% 64.4% 23.3% 24.2%
56.2% 56.9% 20.4% 21.6%
88.2% 88.5% 33.0% 32.6%
100.0% 100.0%
70.1% 69.4% 2.6% 2.7% 4.4% 4.4%
22.9% 23.5%

62.9% 63.9%
56.7% 57.7% 64.0% 64.0% 67.0% 67.0% 88.4% 89.0%
32.3% 31.5%
12.5% 11.4% 44.8% 42.9% 34.1% 37.4% 18.1% 21.0% 17.2% 20.0% 12.9% 15.2%
64.7% 65.6% 24.4% 26.7%
57.4% 58.3% 21.9% 25.0%
88.4% 89.0% 32.7% 32.1%
100.0% 100.0%
69.8% 69.3% 2.8% 3.0% 4.2% 4.5%
23.2% 23.3%

2013E

Fiscal Year

Mar-13 Jun-13 Sep-13 Dec-13

2009A 2010A 2011A 2012E 2013E

Margin Analysis
Gross Margin (GAAP)
Storage
Content Management & Archiving Security
VMware
Product Services
SG&A
Research and Development Operating Expenses EBITDA Margin
PTOP Margin
Pretax Margin
Net Income
Consolidated EMC Non-GAAP Gross Margin Non-GAAP PTOP Margin
Information Infrastructure Non-GAAP Gross Margin Non-GAAP PTOP Margin
VWM
Non-GAAP Gross Margin Non-GAAP PTOP Margin
Revenue
Storage
Content Management & Archiving Security
VMware
Year-Over-Year Growth (%)
Revenue
Storage
Content Management & Archiving
Gross Margin
Storage
Content Management & Archiving
SG&A
Research and Development
Pretax Margin
Sequential Growth (%)
Revenue
Storage
Content Management & Archiving
Gross Margin
Storage
Content Management & Archiving Security
VMware
SG&A
Research and Development Operating Expenses
PTOP Margin
Pretax Margin
Revenue Mix
Storage
Content Management & Archiving Security
VMware

Mar-12 Jun-12 Sep-12 Dec-12

6.6% 7.1%
3.2% 3.4% -2.7% 1.3%

8.6% 9.1%
6.3% 6.6% 1.4% 1.2%

14.4% 14.4% 5.8% 11.0% 18.1% 19.2% 17.8% 17.9%

7.6% 7.2%
2.1% 1.8%
1.1% -3.3% 16.9% 7.3% 18.6% 20.2%
7.6% 7.1%
12.7% 7.6% 8.9% 7.2% 4.2% 7.2% 3.2% 6.9% 7.0% 13.5% 6.9% 13.7%

9.7%
6.2% -4.6% 10.5% 18.4%
8.4%
9.8%
8.8% 12.1% 13.3% 13.7% 14.2%

10.3%
7.1% -0.4% 11.0% 18.0%
8.6%
13.0% 9.8% 11.3% 12.3% 11.5% 11.7%

-8.2% 4.8% 0.8% 12.5%

-9.2% 3.7% 1.4% 11.7% -25.4% 9.2% 3.6% 19.8%

-9.3% 6.9% -5.0% 20.4% -2.3% 7.4% -0.4% 12.8%

-10.4%
-12.7% -26.5% -10.6%
-3.2%
-5.1% 1.8% -3.3% -25.0% -24.3% -26.0% -26.0%
70.1% 2.6%

6.4% 1.2%
5.5% 2.3% 9.2% 3.6% 6.9% -3.5% 7.8% -0.4%
3.5% 0.8%
6.5% 1.6%
4.3% 1.0% 11.8% 1.8% 12.5% 0.9% 12.9% 0.9% 12.9% 1.0%
69.4% 69.8% 2.7% 2.8%

14.3%
13.6% 19.8% 20.4% 13.6%
9.8%
2.6%
7.8% 30.4% 30.7% 32.3% 32.4%
69.3% 3.0%

4.4% 4.4% 4.2% 4.5% 22.9% 23.5% 23.2% 23.3%

55.3% 59.0%
50.7% 54.0% 62.8% 64.9% 69.2% 69.6% 84.4% 85.1%
32.4% 31.6% 11.6% 11.1% 44.0% 42.7% 19.0% 23.1% 11.3% 16.3% 10.9% 15.8%
9.0% 12.1%
57.0% 60.4% 17.4% 22.0%
52.3% 55.4% 16.3% 20.9%
84.4% 85.1% 24.3% 27.5%
100.0% 100.0%
76.0% 74.6% 5.3% 4.3% 4.3% 4.3%
14.4% 16.8%

61.2% 62.3%
56.4% 56.8% 64.3% 65.4% 64.8% 66.6% 85.8% 88.2%
32.4% 32.2% 10.7% 11.8% 43.1% 44.0% 25.1% 25.3% 18.0% 18.4% 16.8% 17.5% 12.8% 12.9%
62.6% 64.1% 23.9% 24.6%
57.2% 57.6% 22.3% 22.7%
85.8% 88.2% 30.8% 31.9%
100.0% 100.0%
73.5% 71.6% 3.5% 3.0% 4.1% 4.2%
18.8% 21.2%

62.8%
56.5% 64.0% 66.5% 88.6%
32.2% 12.1% 44.3% 25.3% 18.6% 17.7% 13.3%
64.6% 24.7%
57.2% 22.3%
88.6% 32.6%
100.0%
69.6% 2.8% 4.4%
23.2%

-5.7%
-8.4% -5.9%

21.3%
19.1% -0.5%

17.6%
15.9% -4.6%

8.0% 7.9%
5.1% 4.9% -8.0% 0.4%

4.2% 20.4% 13.5% 10.4% 11.3% 7.7% 41.1% 32.0% 21.7% 18.2%

-5.7% 29.3%
-9.4% 27.0% -3.2% 2.8% 2.1% 21.0% 6.0% 42.3%
-1.4% 18.4% -5.5% 16.0% -2.5% 17.8%
-16.2% 73.9% -21.2% 76.4% -18.2% 63.1% -17.2% 56.1%

22.0%
20.9% -5.5% 5.7% 33.1%
20.5% 13.9% 18.8% 30.3% 25.0% 25.0% 20.5%

10.0% 8.8%
5.8% 4.4% -6.3% -1.8% 13.4% 11.2% 25.0% 18.8%
7.2% 7.9% 18.5% 10.7% 10.0% 8.7% 10.0% 8.9% 12.3% 9.2%
8.2% 11.5% 9.3% 11.7%

76.0% 74.6% 73.5% 71.6% 69.6% 5.3% 4.3% 3.5% 3.0% 2.8%

4.3% 4.3% 4.1% 4.2% 4.4% 14.4% 16.8% 18.8% 21.2% 23.2%

Source: Company data, Morgan Stanley Research

7

MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.

Exhibit 8
EMC Balance Sheet

($ in millions)

2012E

2013E

Mar-12 Jun-12 Sep-12 Dec-12

Mar-13 Jun-13 Sep-13 Dec-13

2009A 2010A 2011A 2012E 2013E

Current Assets:
Cash and cash equivalents
Short-term investments
Accounts and notes receivable, less allowance for doubtful Inventories
Deferred income taxes
Other current assets
Total Current Assets
Long-term investments
Property, plant and equipment, gross Less: Accumulated depreciation Property, plant and equipment, net Intangible and other assets, net Goodwill, net
Deferred income taxes
Total Assets
Liabilities
Current Liabilities:
Notes payable and current portion of long-term obligation Accounts payable
Accrued expenses
Income taxes payable
Deferred revenue
Total Current Liabilities
Long Term Liabilities
Deferred revenue
Deferred income taxes Long-term obligations:
Other liabilities
Total Long Term Liabilities
Minority interest
Stockholder's Equity:
Common shares, par value $.01 Additional paid-in capital Deferred compensation Retained earnings
Accumulated other comprehensive loss, net Treasury stock, at cost
Total Stockholder's Equity
Total Liabilities and Stockholder's Equity

4,671 1,668 2,662 1,034
750
515
11,300
4,540
7,069
(4,190)
2,879
1,714 12,217 1,336 33,985
1,621 923 2,246 24 4,073 8,887
2,723 839 104 297 3,963 1,080
21 3,513

3,993 1,660 2,974 1,029
792
486
10,935
5,253
7,241
(4,299)
2,942
1,758 12,655 1,416 34,959
1,622 880 2,321 188 4,183 9,193
2,875 467 89 296 3,726 1,102
21 3,763

4,161 1,285 3,164 1,158
802
541
11,111
5,134
7,437
(4,454)
2,983
2,053 13,728 1,495 36,506
1,637 1,074 2,318
287 4,353 9,669
2,884 717 73 307 3,982 1,152
21 3,855

5,276 1,285 3,344 1,113
802
544
12,364
5,134 8,562 (4,707) 3,855 1,190 13,728 1,495 37,766
1,637 1,065 2,388
331 4,094 9,515
3,313 717 119 307 4,457 1,190
21 4,178

6,270 1,285 3,043 1,120
802
521
13,042
5,134 8,779 (4,968) 3,811 1,177 13,728 1,495 38,387
1,637 1,006 2,259
278 4,235 9,415
3,258 717 119 307 4,401 1,231
21 4,493

7,448 1,285 3,127 1,169
802
546
14,377
5,134 9,007 (5,244) 3,763 1,170 13,728 1,495 39,667
1,637 1,075 2,335
300 4,325 9,672
3,414 717 119 307 4,558 1,275
21 4,816

8,680 1,285 2,991 1,087
802
550
15,395
5,134 9,236 (5,529) 3,707 1,161 13,728 1,495 40,620
1,637 1,087 2,348
302 4,357 9,730
3,440 717 119 307 4,584 1,319
21 5,143

9,991 1,285 3,296 1,191
802
619
17,185
5,134 9,494 (5,823) 3,671 1,157 13,728 1,495 42,370
1,637 1,191 2,488
362 4,388 10,066
3,743 717 119 307 4,886 1,368
21 5,475

6,302 393 2,109 886 559 284 10,533
2,692 5,318 (3,093) 2,224 1,186 9,210 961 26,807

4,119 1,256 2,570
856 610 372
9,783
4,116 6,072 (3,543) 2,528 1,624 11,773 1,009 30,833

4,531 1,787 2,937 1,010
733
584
11,583
4,525 6,873 (4,040) 2,833 1,766 12,155 1,406 34,268

5,276 1,285 3,344 1,113
802
544
12,364
5,134 8,562 (4,707) 3,855 1,190 13,728 1,495 37,766

9,991 1,285 3,296 1,191
802
619
17,185
5,134 9,494 (5,823) 3,671 1,157 13,728 1,495 42,370

---- 16,707 17,357 17,983 18,837 (186) (203) (155) (155)
- - - (276) 20,055 20,937 21,704 22,604 33,985 34,959 36,505.718 37,766

----

19,464 (155) (483)
23,340 38,387

20,176 (155) (696)
24,162 39,667

20,894 (155) (915)
24,987 40,620

21,851 (155) (1,140)
26,051 42,370

- 899
1,887 58 2,263 5,107
1,374 944 3,100 185 5,603 511
21 3,875

3,215 1,063 2,090
200 2,811 9,378
1,853 983 235 217 3,288 763
21 3,817

3,305 1,102 2,355
156 3,459 10,376
2,715 842 119 288 3,965 968
20 3,053

1,637 1,065 2,388
331 4,094 9,515
3,313 717 119 307 4,457 1,190
21 4,178

1,637 1,191 2,488
362 4,388 10,066
3,743 717 119 307 4,886 1,368
21 5,475

-----

11,795 (105)
-
15,586 26,807

13,659 (93)
-
17,404 30,833

16,121 (235)
-
18,959 34,268

18,837 (155) (276)
22,604 37,766

21,851 (155) (1,140)
26,051 42,370

Source: Company data, Morgan Stanley Research

8

MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.

Exhibit 9
EMC Cash Flow Statement

($ in millions)	2012E	2013E
Cash Flow Statement (Non Cumulative)	Mar-12 Jun-12 Sep-12 Dec-12	Mar-13 Jun-13 Sep-13 Dec-13		2009A 2010A 2011A 2012E 2013E
				1,158 1,970 2,609 2,827 3,014 1,073 1,168 1,422 1,500 1,584 25 7 (1) 9 - ----- 108 106 103 34 - ----- 14 19 20 21 - 32 (50) (19) (73) - ----- 601 668 823 915 1,014 (46) (282) (362) (212) - - - - 39 177 (40) (21) 241 (406) (158) (114) 4 (54) 140 154 (138) 4 (75) 456 366 957 29 (32) 3,334 4,549 (412) (745) ----- (305) (5,410) 5,171 (363) (6,322) 3,625 (442) (7,180) 5,121 5 (392) (393) (62) 35 158 337 1,509 (121) 5,669 (20) - (387) 48 (291) (78) 60 (75) 110 125 (156) 101 417 31 1,228 723 (0) - 6,021 6,664 (801) (754) (932) (420) (435) (5,012) - 4,154 - 844 - ----- ----- 705 - - (300) (2,664) (182) (3,095) 366 228 (3,195) (537) 86 (534) (6,476) (3,544) 781 673 431 338 (1,000) (2,000) - - (1,878) - (199) - (3,265) (1,367) 456 283 214 - 437 1,130 - ----- - - (141) (1,700) - (387) 282 (27) (15) - 5-34- - (738) (565) (297) 212 (244) (1,719) (1,993) 8 (12) 5 (18) 459 (2,183) 412 745 5,844 6,302 4,119 4,531 - (581) - 4,715 5,276 ----- 6,302 4,119 4,531 5,276 9,991 (656) (864)
Operating activities: Net income (loss) Depreciation and amortization Non-cash restructuring, inventory and other special ch Other than temporary declines in equity investments Net gain on investments, including gain on sale of VM Amortization of deferred compensation Provision for doubtful accounts Deferred income taxes, net Net loss on disposal of property, plant and equipment Stock based compensation expense Tax benefit from stock options exercised Minority interest Others Changes in Operating Assets and Liabilities: Accounts and notes receivable Inventories Other assets Accounts payable Accrued expenses Income taxes payable Deferred revenue Other liabilities Net cash provided by operating activities Investing activities: Additions to property, plant and equipment Proceeds from sales of property, plant and equipment Capitalized software development costs Purchases of short and long-term available for sale secu Sales of short and long-term available for sale securities Maturities of short and long-term available for sale secur Purchases of short and long-term held-to-maturity secur Maturity of short and long-term held-to-maturity securitie Purchase of other assets Business acquisitions, net of cash acquired Others Net cash used in investing activities Financing activities: Issuance of common stock Issuance of subsidiary stock Purchase of treasury stock Cash portion of McData Corporation spinoff dividend Redemption of convertible subordinated notes Payment of long-term and short-term obligations Issuance of long-term and short-term obligations VMware spinoff proceeds Net cash (used in) provided by financing activities	626 689 659 853 367 375 385 372 432- ---- 9 11 14 - ---- 9 15 (3) - (52) (64) 44 - ---- 201 223 235 256 (106) (49) (57) - - - - 39 (9) (168) 620 25 1,688 (29) 18 - 300 (96) (20) (29) (180) 46 (3) (106) (1,586) 1,439 (101) (2,004) 1,016 (324) (184) (76) (164) 48 35 (41) 189 10 (68) 6 208 159 44 260 179 170 (22) (3) - 1,237 1,438 1,658 (154) ---- (179) (191) (1,421) - 1,698 - 262 - ---- ---- ---- (102) (522) (1,254) - 15 (84) (130) - 274 (219) (1,565) (1,146) 309 180 119 88 68 111 34 70 - - (260) (120) (276) ---- (1,700) - - (0) (14) - (0) - 311- 66 (209) (1,340) (329) 11 (21) 140 (678) 4,531 4,671 (154) - (116) (209) ---- 4,671 3,993 4,161 5,276 (231) (109) (104) (8) 168 3,993 - 1,115 4,161 (9) 70 (335)	628 712 718 957 379 392 402 411 ---- ---- ---- ---- ---- ---- ---- 245 251 255 262 ---- 41 44 44 48 ---- 301 (7) 23 (60) (129) (84) 135 (305) (49) 82 (104) (25) (4) (69) 70 11 104 77 12 140 (53) 22 2 61 86 246 58 333 ---- 1,453 1,655 1,717 1,838 (217) (228) (229) (258) ---- (104) (109) (108) (114) ---- ---- ---- ---- ---- ---- ---- ---- (321) (337) (337) (372) 70 72 72 70 ---- (207) (213) (219) (225) ---- ---- ---- ---- ---- (137) (141) (147) (155) ---- 994 1,177 1,232 1,311 5,276 6,270 7,448 8,680 ---- 6,270 7,448 8,680 9,991
Effect of exchange rate changes on cash Net (decrease) increase in cash and cash equivalent
Cash and cash equivalents at beginning of the year Adjustment for Restatement Cash and cash equivalents at end of year

Source: Company data, Morgan Stanley Research

9

MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.

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STOCK RATINGS
Morgan Stanley uses a relative rating system using terms such as Overweight, Equal-weight, Not-Rated or Underweight (see definitions below). Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold and sell. Investors should carefully read the definitions of all ratings used in Morgan Stanley Research. In addition, since Morgan Stanley Research contains more complete information concerning the analyst's views, investors should carefully read Morgan Stanley Research, in its entirety, and not infer the contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations.
Global Stock Ratings Distribution
(as of December 31, 2012)
For disclosure purposes only (in accordance with NASD and NYSE requirements), we include the category headings of Buy, Hold, and Sell alongside our ratings of Overweight, Equal-weight, Not-Rated and Underweight. Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold, and sell but represent recommended relative

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weightings (see definitions below). To satisfy regulatory requirements, we co

MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.
rrespond Overweight, our most positive stock rating, with a buy recommendation; we correspond Equal-weight and Not-Rated to hold and Underweight to sell recommendations, respectively.

Coverage Universe % of

Investment Banking Clients (IBC) % of% of Rating

Stock Rating Category Count Total Count
Overweight/Buy 1103 37% 436 Equal-weight/Hold 1301 44% 497 Not-Rated/Hold 108 4% 27 Underweight/Sell 478 16% 111 Total 2,990 1071

Total IBC Category
41% 40% 46% 38% 3% 25% 10% 23%

Data include common stock and ADRs currently assigned ratings. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Investment Banking Clients are companies from whom Morgan Stanley received investment banking compensation in the last 12 months.
Analyst Stock Ratings
Overweight (O). The stock's total return is expected to exceed the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
Equal-weight (E). The stock's total return is expected to be in line with the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
Not-Rated (NR). Currently the analyst does not have adequate conviction about the stock's total return relative to the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
Underweight (U). The stock's total return is expected to be below the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months.
Analyst Industry Views
Attractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the relevant broad market benchmark, as indicated below.
In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant broad market benchmark, as indicated below.
Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant broad market benchmark, as indicated below.
Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index; Europe - MSCI Europe; Japan - TOPIX; Asia - relevant MSCI country index.
.
Stock Price, Price Target and Rating History (See Rating Definitions)

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MORGAN STANLEY RESEARCH
January 10, 2013 EMC Corp.
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	Industry Coverage:Systems and PC Hardware Company (Ticker) Katy L. Huberty, CFA Accenture Plc (ACN.N) Apple, Inc. (AAPL.O) Cognizant Technology Solutions Corp (CTSH.O) DELL (DELL.O) EMC Corp. (EMC.N) Fusion-io, Inc. (FIO.N) Hewlett-Packard (HPQ.N) IBM (IBM.N) Lexmark International (LXK.N) NCR Corp. (NCR.N) NetApp Inc (NTAP.O) QLogic Corporation (QLGC.O) SMART Technologies (SMT.O) Seagate Technology (STX.O) Teradata (TDC.N) Western Digital (WDC.O) Scott Schmitz Brocade Communications Systems (BRCD.O) Rating (as of)Price* (01/09/2013) O (07/10/2012) O (05/26/2009) E (07/10/2012) E (09/30/2012) E (01/10/2013) O (01/03/2012) E (05/23/2011) E (09/08/2009) U (07/14/2010) E (09/25/2011) E (07/27/2009) U (05/23/2011) E (02/14/2012) E (01/03/2012) O (05/23/2011) E (04/28/2011) E (09/26/2011) $69.78 $517.1 $74.41 $10.93 $24.02 $19.26 $15.85 $192.32 $25.49 $26.6 $32.21 $9.76 $1.91 $33.48 $63.81 $43.8 $5.37 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted. © 2013 Morgan Stanley