It has been all good news lately for the EMC (EMC). On April 19th, it will announce its first-quarter 2012 financial results, and I fully expect to see good things. It has a 52 week low of around $20 per share, and a high of $30 per share, and it is back near the top of that range right now, hovering at around $29 per share. Prices have only been going up, ever since the company announced that it enjoyed record earnings and sales in the fourth quarter of 2011. I don't expect to see another quarter of record earnings in the April 19th report, but I certainly expect the trend of high earnings to continue.
It was announced that Webair, a global leader in web hosting, has deployed EMC Isilon scale-out NAS to provide its clients with reliable, fast, easily scaled cloud storage. This is an attempt to reduce costs and allow for more flexibility, as Webair's needs grow. The customers will enjoy reduced costs, flexible storage services, improved performance, and easy scalability. Before this installment, clients needed more complex systems for full redundancy, leading to higher management costs. The first Isilon deployment was in September 2008, and it used Virtual LANs (VLANs). The scaling of Isilon's "pay-as-you-grow" model allows clients to only pay for the storage capacity that they use. The Isilion X-Series has simplified the workings of the system on both the clients' side and Webair's.
Also, it was recently announced that EMC will be pairing up with the Environmental Defense Fund [EDF] and InnoCentive, the pioneer in open innovation, crowdsourcing, and prize competitions, to carry out a new Eco-Challenge that will search for solutions to the issue of ensuring the responsible disposal of used electronic components and subsystems. This requires a new way to track such shipments. The disposal of this kind of waste has been a concern for quite some time, both for the company and environmental groups, so this challenge is hopefully a long-term solution to a long-term issue. The Environmental Defense Fund is a nonprofit organization that focuses on the environment. Innocentive is a way of crowd sourcing, so that organizations can be connected to a large pool of resources.
Moreover, recently, EMC acquired the San Francisco-based Pivotal Labs. This is a software development services and tools provider. EMC plans to expand the global impact of Pivotal Labs by bringing its services to a greater number of businesses, both emerging start-ups and the world's largest corporations, that are ready to utilize Cloud, Big Data, Social and Mobile in the next-generation world of applications. Currently the program has around 240,000 clients, but EMC hopes to increase that number significantly. Assuming that its plans come through as expected, the company should see a boost from this adventure, and the purchase should not have much of a negative impact on the 2012 balance sheet.
One of EMC's competitors, Dot Hill Systems (HILL), has seen great earnings reports as of late. Its first-quarter 2012 earnings expectations are above analysts previous predictions. This comes as Dot Hill has announced several important boons, such as a five-year extension of its supply agreement with Hewlett-Packard (HPQ). All of these signs are good for Dot Hill. It seems to be on the right track going forward.
Another competitor, Quantum (QTM), is holding its own, sticking right around the predictions for this year's earnings. Quantum Corporation has acquired, according to a recent announcement, Pancetera Software Inc., a privately held company. This transaction cost Quantum $8.4 million in cash and $3.6 million in Quantum common stock. This amounts to around 1.2 million shares. The total cost comes to $12 million. This acquisition should turn out to be profitable for Quantum.
Overland Storage (OVRL), another competitor of the EMC Corporation, has made some headlines lately. It is sitting right near the center of its 52-week range. It recently announced a proposal of a public offering of common stock to generate some proceeds that can be used towards working capital, along with other things. The sole underwriter for the offering is Needham & Company, LLC. Overland Storage has also announced more details. It is offering up 3,200,000 shares of its common stock. These shares will be priced at $2 per share. The underwriter has a 30-day option to acquire 480,000 more shares to cover over-allotments in connection with the offering. The expectation for this offering is that it will net Overland Storage around $5.8 million after expenses and the underwriting discount. This may give Overland the boost that it needs to get moving.
Right now it seems like EMC is doing quite well, but its competitors are also doing quite well. Each of these companies is certainly making moves toward expansion, diversification and protecting its portfolio. However, EMC seems, to me, to have made the best decisions toward these goals. Pivotal Labs is an innovative leader in cloud storage and online technologies, and if EMC can increase its customer base, it can move toward being a leader in new, developing systems. Cloud storage and computing seems to be a new trend, with the possibility of a substantial burst. EMC will be there to ride that out.
I am optimistic about EMC's future, because it seems to me that it is on a more sustainable path than most of its competitors. The diversification of having Pivotal Labs, the EDF contract, and the Webair contract gives the company plenty to work with and a few safety nets to fall back into, if need be. Watch for anything to come to prevent EMC's growth, of course, but don't be surprised if it's smooth sailing for a while.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.