It's good to be EMC (NYSE:EMC) these days. The maker of storage devices and related software delivered another outstanding quarter yesterday, growing revenue by 33% over the same period last year and 5% sequentially. Net income also rose 136% to $193 million from $82 million during last year's second quarter. And there are no signs of slowing: EMC anticipates $8.1 billion in sales this year but has booked only $3.8 billion thus far.

The results prove that EMC has done better than effect a complete turnaround. It has become one of the dominant vendors of storage hardware and software, on par with heavies such as Hewlett-Packard (NYSE:HPQ), Hitachi (NYSE:HIT), and IBM (NYSE:IBM). Just look at the numbers. Researcher IDC says EMC widened its leads in the markets for storage management software and external disk storage systems in the first quarter by roughly 3% each.

There's no question that EMC's strategic acquisitions have helped considerably. But it's becoming increasingly clear that acquisitions are only part of the growth story. This quarter, for example, EMC once again teamed with longtime partner Dell (NASDAQ:DELL) to introduce a lower-cost storage networking device for smaller businesses. The firm also hopped on the Chinese bandwagon, inking a deal to OEM storage systems to Langchao Electronic Information Industry, a leading server vendor there.

Of course, there are also some big problems with EMC. For one, it trades for more than 42 times trailing earnings, well above the market's multiple of roughly 23. That's pricey.

Ask yourself: Do you think EMC can grow its income by more than 40% annually over the next three years? The firm would have to nearly triple its projected 2004 earnings of $825 million to meet that goal, and that would likely require selling more than $22 billion in hardware and software. If you're suddenly thinking that's unlikely, you're probably right. After all, the long-term growth rate for the storage hardware market is projected to be 7%. (Software will be higher, but it's a smaller market.)

And then there's share dilution. EMC is one of the worst offenders when it comes to stock options. Go back to that net income number. Although total income grew by 136%, diluted earnings per share only doubled, to $0.08 from $0.04. Why? Because EMC's year-over-year share count grew by almost 11%. Ouch.

I admit it: I really want to invest in EMC. It's a great, growing business. But how can I plunk down money for shares when management has a history of taking profits from existing owners? Answer: I can't.

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Fool contributor Tim Beyers is tired of beating up on tech stocks, because he loves technology. Tim owns stake in any of the firms mentioned, and you can view his Fool profile here.