EMC Corp. (
NYSE:EMC), easing through
the integration of Data Domain Inc., reports third-quarter earnings on Thursday with a
Webcast being held at 8:30 a.m. ET.
Analyst takesLast week, Thomas Weisel Partners LLC analyst Doug Reid upgraded shares of the acquisitive data storage tech provider to "Overweight" from "Market Weight." He also increased the revenue estimate for 3Q from $3.4 billion to $3.45 billion
and the EPS estimate from 18 cents to 21 cents.
A research
note
showed Reid raised the 12-month price target from $15 to $24. Among
other points, the raised target is based on EMC seeing improving demand
for data storage systems in the fourth quarter and improving trends in
VMware Inc. (
NYSE:VMW), "where an unfolding IT hardware
refresh cycle is, we believe, likely to drive a reacceleration in server virtualization activity."
Also last week, Edward Jones analyst Bill Kreher wrote in a research
note that the storage market is
expected to witness strong long-term growth given:
- Delayed investment in storage products during the
downturn leading to increased investment down the
road,
- increasing regulatory and compliance needs
that will fuel demand for storage, and
- explosive
growth in digital content as legacy data and media
content migrate to digital formats.
In July, Canaccord Adams Inc.
noted several risk factors for Hopkinton, Mass.'s EMC -- one being that EMC counts Dell Inc. (NYSE:DELL) as its only major customer, at about
12% of sales in 2008. Canaccord analysts said, "Dell made public statements pertaining to its
desire to make 'transformative acquisitions.' Should said activity include the purchase
of a storage systems supplier, our fundamental outlook could be negatively impacted." Dell recently
bought IT services company Perot Systems Corp. (NYSE:PER) for about $3.9 billion.
Management and strategy
EMC chief executive Joseph Tucci wants to retire in three years when he's 65. EMC recently hired Patrick Gelsinger, who ran the core chip business at Intel Corp. (NASDAQ:INTC), to run its storage products operation. We noted that by bringing in a high-powered potential successor, Tucci is increasing the odds that EMC will
continue to be a consolidator, as opposed to becoming a target for someone like Cisco Systems Inc. (NASDAQ:CSCO).
Money to spend, sector consolidationEMC completed its $2.2 billion
acquisition of Data Domain in July and still has billions of dollars for potential deals. And the data center sector has been consolidating. The M&A run started shortly after Cisco Systems announced in March that it was moving into data centers. In April, Oracle Corp. (NASDAQ:ORCL) spent $7.4 billion to acquire Sun Microsystems Inc. (NASDAQ:JAVA).
Tucci said the Sun deal raised the stakes in
the battle for control of the corporate data center market. Most recently, stoking the
data center M&A trend, Emerson Electric Co. (NYSE:EMR) said it will acquire Avocent Corp. (NASDAQ:AVCT) for $1.2 billion in cash.
If EMC's track record is any indication, we'll hear about more deals. It's M&A strategy made it a contender for our Most Admired Corporate Dealmakers award in the IT sector. Check out the other candidates and vote for the best at
www.TheDeal.com/CDsurvey. -
Baz HiralalAlso see:
Cheaper buys than BrocadeSee the complete list of information technology companies
| EMC Corp. |
| Acquisitions |
Date |
Target |
Acquirer |
Deal value ($mill.) |
10/31/08 |
Trango Virtual Processors SARL |
VMware Inc.
(Parent: EMC Corp.) |
$64 |
69/30/2008 |
Blue Lane Technologies Inc. |
VMware Inc.
(Parent: EMC Corp.) |
15 |
4/1/08 |
Conchango plc |
EMC Computer Systems (UK) Ltd.
(Parent: EMC Corp.) |
83 |
3/5/08 |
Iomega Corp. |
EMC Corp. |
211 |
12/26/07 |
EMC Document Sciences Corp. |
EMC Corp. |
85 |
4/26/07 |
Propero Ltd. |
VMware Inc.
(Parent: EMC Corp.) |
25 |
11/1/06 |
Avamar Technologies Inc. |
EMC Corp. |
165 |
9/18/06 |
Network Intelligence Corp. |
EMC Corp. |
245 |
6/29/06 |
RSA Security Inc. |
EMC Corp. |
2,134 |
5/6/06 |
Kashya Inc. |
EMC Corp. |
153 |
| Total |
$3,179 |
|
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