EMC plans to partner with Verizon's Terremark unit on a cloud computing initiative. Together they will provide cloud computing products to customers. This will significantly boost EMC's position in the fast-growing market. Terremark will standardize its cloud system on EMC's infrastructure which essentially means that it will consist of infrastructure that is managed for one organization.
This is not the first deal of this kind that EMC has recently made. It also signed similar deals with several other companies, including AT&T (T). At this point in time we do not have a clear idea regarding what exactly the terms of the EMC/Verizon-Terremark deal consist of, but no doubt we will hear more about this soon. What we do know is that both companies expect to benefit from the partnership. They already had a fairly strong and stable relationship prior to the deal and this alliance should continue forward.
Cloud computing is the way forward, but EMC is not the only company trying to get on the bandwagon. In fact, its announcement came at the same time that Oracle (ORCL) unveiled its new cloud offering. Cloud computing is the future, so we need to keep an eye on which companies stay in the lead in this regard.
In other news, EMC has acquired Watch4Net Solutions, a leader in IT performance management. The transaction was all-cash, but there should be no significant impact from this transaction on EMC stock. This is another indication of EMC's determination to get involved with cloud computing as Watch4Net provides performance management software that provides real-time, historical and projected visibility into cloud infrastructure performance.
The two companies have long since worked well together on a number of different endeavors and it comes as no real surprise that EMC decided to make the acquisition. In the long run it will benefit both companies. This relationship has been ongoing for 7 years, so we can assume that there are already very efficient structures in place.
Although we cannot be certain if it has anything to do with the acquisition, EMC's shares fell recently after the announcement of the purchase was made. To me, this seems that there may be some out there who are less than pleased with this new development. However, it seems obvious that the acquisition serves to augment EMC's "world-class IT management solution to address customers' most critical IT management needs across their physical and virtual IT environments" and make the entire system even better.
Overall, it seems that EMC has a good idea about how to move forward in the market and about how to make a strong impression in the arenas in which it functions. Those investors who are searching for a tech stock to add to their portfolio need look no further than EMC, a company that has a bright future ahead of it and that seems to have a clear idea of where it is going.
EMC remains above the curve and its partnership with Verizon should keep its stock away from danger for future quarters. The excitement about more transitions to cloud computing will only help EMC continue to grow and keep investors interested in the company's capabilities.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.