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About two months ago, I put EMC through the 9 criteria of a Cash-King/Rule-Maker. The only criterion EMC didn't meet was the one for Flow Ratio (I calculated it at 2.3, and ideally it should be below 1.25). I decided it was probably high due to the higher price of their products, which would make the value of their inventory a little pricey. Its showing on all the other criteria was passing to outstanding (Gross Margin: 52.3%, Debt Multiple: 2.3, Net Margin: 20.1%!). Their latest fiscal report (ending Dec. 1998) checks out pretty close to the same.

Add to this that:
1) EMC is the breakaway leader in enterprise storage systems (over $51 billion vs. Seagate in second place at $9.8 billion).

2) EMC has a solution to help companies through the Y2K transition period (

3) Enterprise storage is expected to go from a $4 billion industry to $10 billion in 2001.

4) EMC just posted their best quarter of sales ever (a record $1.19 billion, 36% higher than the fourth quarter of 1997).

Happily, I decided to buy stock in EMC about a month ago. I think the Rule-Maker portfolio would do well to do the same.

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