Tue, Jun. 16, 6:07 PM
- Identity Manager, offered either as a cloud service or through on-premise deployments, allows enterprise users to sign on to popular Web, PC, and mobile apps with a common ID. It's offered as a part of VMware's (NYSE:VMW) AirWatch enterprise mobility management (EMM) platform.
- Many other companies have already launched single sign-on offerings; rival Microsoft includes one in its Enterprise Mobility Suite. VMware asserts Identity Manager is set apart by its AirWatch integration (said to enable stronger/simpler authentication), a customizable app portal, and conditional access controls allowing IT admins to decide whether a device should be managed or not.
- Meanwhile, Longbow's Joe Wittine has defended VMware parent EMC a day after FBR downgraded to Market Perform. Following checks with European IT resellers, Wittine reports "favorable commentary on EMC's converged offerings (VCE, VSpex, and new products) is widespread, and more bullish than we were expecting."
- He also thinks demand for EMC's mid-range VNX storage systems is steady (aided by U.S. price discounts), and that projects delayed at the end of Q1 closed in Q2. Converged systems are seen driving potential upside.
Mon, Jun. 15, 9:27 AM
- FBR's Daniel Ives: "We are downgrading [EMC] from Outperform to Market Perform and lowering our price target from $31 to $28 (~13x our FY16 pro forma EPS estimate) in light of the company's weakening fundamentals, management's dogmatic view around VMware (NYSE:VMW), and execution issues that lower our confidence in management’s ability to steer this company back to normalized growth and margins over the coming quarters."
- He adds EMC's core storage ops have performed inconsistently in recent quarters - the company is counting on a May refresh unveiled at the EMC World conference to provide a lift - and sees "lackluster growth prospects in 2H15/ FY16."
- Large buybacks, new product lines (XtremIO, ViPR, ScaleIO, VMware's NSX and AirWatch platforms), and the Virtustream acquisition are still viewed favorably, and Ives thinks activists (Elliott Management?) could potentially "put a floor on EMC's shares." However, he also believes "the company will need more M&A to help find its next growth act, as its core business remains very mature and may have inherent challenges ahead given the shift to the next-generation datacenter and the evolving role of storage capabilities/needs for enterprises going forward in a virtualized world."
- EMC -1.4% premarket to $26.68. Piper, FBN, and Pac Crest downgraded EMC in March/April, often while citing competitive and secular growth concerns. Bernstein upgraded, citing weak sentiment and multiple value-creation levers.
Tue, Jun. 9, 1:42 PM
- Summit Research's Srini Nandury thinks Nimble Storage's (NYSE:NMBL) recent rally has been fueled by M&A hopes ... and considers them justified. He believes Cisco (NASDAQ:CSCO), EMC, and NetApp (NASDAQ:NTAP) could be among the larger OEMs willing to bid for the hybrid storage array upstart.
- Nandury: "Given that Nimble is one of the best Hybrid storage assets in the market, any buyout offer for Nimble will likely trigger a bidding war as we had seen previously with both Data Domain and 3Par. And, given that Nimble is executing solidly in both SMB and enterprise storage environments, and is expected to roll out both NAS and Object storage in the near-term (12-18 months) and will most likely get acquired, we reiterate our BUY rating on the stock and maintain our $40 PT."
- EMC has bought flash array vendors XtremIO and DSSD; Cisco has bought flash vendor Whiptail; and hard drive giants Seagate and Western Digital have also used M&A to expand their flash offerings. NetApp has relied more on internal R&D to flesh out its product line, but the company's recent top-line woes and CEO change have fueled speculation it could turn to M&A.
- Of note: With a market cap of $2.2B (a deal premium could bring it near $3B), Nimble would be digestible for larger industry players, but not cheap.
Thu, Jun. 4, 4:30 PM
- HP (NYSE:HPQ) was "nearing a deal to acquire Computer Sciences Corp. (NYSE:CSC) last month until the talks broke down," Bloomberg reports. According to one source, HP "doesn’t intend to revisit" deal talks.
- With a current market cap of $9.7B (an M&A premium could have pushed its valuation above $11B), CSC would at least have been HP's biggest acquisition since the ill-fated 2011 Autonomy purchase. CSC, which has reportedly tried to sell itself in prior years as well, is 2 weeks removed from announcing it's breaking up into a commercial IT services firm and a U.S. public sector services firm.
- HP, whose own breakup takes effect in 5 months, has suggested its enterprise ops (to be known as Hewlett-Packard Enterprise post-breakup) could make big purchases - the company recently closed a $3B deal to buy Wi-Fi hardware/software vendor Aruba Networks. Raymond James speculated today HP will buy EMC (current market cap of $52.4B), in part to get hold of VMware (NYSE:VMW).
- Separately, HP says it will show off a prototype of its cutting-edge Machine computer architecture next year; the system will pack 2,500 CPU cores and 320TB of DRAM within a single server rack. By 2020, HP wants to offer Machine servers relying on Memristors, a next-gen memory format that would replace both DRAM and hard drives/NAND flash.
Tue, May 26, 8:16 AM
- When the deal closes (expected in Q3), Virtustream will form EMC's new managed cloud services business. "The acquisition represents a transformational element of EMC's strategy to help customers move all applications to cloud-based IT environments," says the company.
- Virtusteam will operate as a separate EMC Federation business, with current CEO Rodney Rogers reporting to EMC chief Joe Tucci.
- The all-cash deal is expected to have no material impact to EMC's 2015 results, but should be additive to revenues and accretive to EPS in 2016.
- Source: Press Release
Fri, May 22, 9:24 AM
Fri, May 15, 12:40 PM
- Dan Loeb's Third Point LLC exited its 10M-share Alibaba (BABA - unchanged) position in Q1, after having upped its stake in the Chinese e-commerce giant in Q4. (13F filing)
- The firm also unloaded its 7M-share position in EMC (EMC -0.1%), which confirmed during the quarter it doesn't plan to spin off VMware, and a 4M-share stake in Williams (WMB +1.3%).
- A 3.3M-share stake was taken in Yum Brands (YUM +3.6%), a 900K-share stake in FedEx (FDX +0.7%), a 1.15M-share stake in J.M. Smucker (SJM -0.1%), and a 626K-share stake in McKesson (MCK). Loeb also respectively took 1.6M-share and 3.5M-share stakes in chipmakers NXP (NXPI +0.2%) and Maxim (MXIM +0.4%).
- Stakes were increased in Delta Air Lines, Actavis, FleetCor, and Roper Technologies, and decreased in Amgen, Ally Financial, eBay, Phillips 66, and Anheuser Busch. Interestingly, a modest 90K-share position was taken in top Alibaba rival JD.com (JD -0.8%).
- Meb Faber observes someone tracking Loeb's top 10 picks since 2000 would have obtained a 12.4% annual return since 2000 (504.8% overall), soundly beating the S&P 500's 4.4% (95.4% overall).
Wed, Apr. 22, 10:37 AM
- Thanks to forex pressures, EMC now expects 2015 revenue of $25.7B and EPS of $1.91, below prior guidance of $26.1B/$1.98 and a consensus of $25.9B/$1.97. But as is the case for subsidiary VMware (guided light yesterday afternoon, rising today), a soft outlook was expected.
- CEO Joe Tucci: "[W]e fell a bit short on first-quarter storage revenue due to geo-political factors in Russia and China and not executing as crisply as we had expected ... That said, we are confident that we will meet our business outlook for the year."
- EMC's core Information Storage sales (65% of revenue, the subject of recent analyst concern) were roughly flat Y/Y at $3.66B. High-end sales -7% to $871M, unified and backup/recovery (inc. mid-range) -11% to $1.28B, emerging storage (flash, object storage, scale-out NAS) +14% to $542M, other storage (inc. VCE) +16% to $967M.
- Content management software (ECD) sales were soft, falling 10% to $138M. RSA +1% to $248M, Pivotal +10% to $54M. VMware revenue rose 11% to $1.5B, with license revenue rising 3% to $576M.
- North American revenue rose 5%, Asia-Pac 1%, and Latin America 8%, while EMEA fell 2%. Forex respectively had 5%, 6%, and 7% impacts on Asia-Pac, Latin America, and EMEA growth.
- A hefty $1.5B was spent on buybacks in Q1, or half the $3B EMC has said it plans to spend in 2015. That helped offset a 150 bps Y/Y drop in gross margin to 61.3%. With EMC cutting costs, operating expenses (non-GAAP) rose a moderate 4%, excluding the 5% impact of the VCE deal.
- Shares have rallied to $27. Bernstein's pre-earnings upgrade is looking good for now.
- Q1 results, PR, earnings slides (.pdf)
Wed, Apr. 22, 6:59 AM
Tue, Apr. 21, 5:30 PM
Fri, Apr. 17, 12:06 PM
- Believing investor sentiment is very weak and that "one or more value creation levers" (bigger capital returns, portfolio restructuring, cost cuts) is "increasingly likely to be pulled," Bernstein's Toni Sacconaghi has upgraded EMC (EMC +1.7%) to Outperform ahead of its April 22 Q1 report, and hiked his target by $3 to $32.
- Sacconaghi observes EMC has significantly underperformed the S&P 500 during the last 3 years thanks to slower growth at both EMC proper and VMware and storage margin pressure (caused in part by high-end weakness). He notes David Einhorn's Greenlight Capital and Dan Loeb's Third Point own stakes (in addition to Elliott Management), and sees CEO Joe Tucci's expected retirement - no formal ETA has been given yet - as a potential catalyst. Improving IT spend and success with growth initiatives are seen as a long-term call option built into the stock.
- He also notes Tucci has suggested EMC is open to making a "consolidating" acquisition - there has been plenty of speculation about potential targets - and that many enterprise IT targets "could add nearly 10% or more" to EMC's EPS. Sacconaghi's $32 target is based on a sum-of-the-parts analysis that assumes core EMC is given a multiple similar to NetApp's.
- FBN, Piper, and Pac Crest have downgraded EMC over the past month. Shares are higher today in the face of a 1% drop for the S&P and a 1.4% drop for the Nasdaq.
Thu, Apr. 9, 12:51 PM
- "We are rather surprised by the uniformity of negative data points about storage spending in CQ1," writes FBN's Shebly Seyrafi, downgrading EMC (EMC -0.9%) to Sector Perform and cutting his target by $3 to $27. "Reasons provided include the usual 'movement to the cloud' and technologies such as data deduplication and compression hurting storage bit demand growth, but we are also hearing that IT managers are reallocating storage dollars toward security (which our checks note is a very attractive market currently)."
- Seyrafi also thinks forex's 2015 impact on EMC will be worse than implied by the company's January guidance, which he considers too aggressive, and that competitive pressures from upstarts such as Pure Storage (reportedly planning an IPO) and Nimble Storage are mounting.
- FBN's call follows March downgrades from Piper and Pac Crest. Pac Crest also reported weak checks, and Piper (also downgraded NetApp) was equally concerned about the likes of Pure and Nimble.
- With some of FBN's concerns already priced in, EMC is down only moderately; shares now trade for 13x 2015E EPS and 12x 2016E EPS. Q1 results arrive on the morning of April 22.
Mon, Apr. 6, 12:54 PM
- VMware is up 4.1% after Nomura upgraded to Buy; the firm cited favorable Q1 survey data, low expectations, a better-than-feared risk/reward for cloud workload migrations, and a belief the July ending of Windows Server 2003 support will act as a tailwind.
- Parent EMC, less than a month removed from reiterating it doesn't plan to spin off VMware, has gradually rallied. The Nasdaq is up 0.7%, and the S&P 0.8%. Piper downgraded EMC 10 days ago.
Fri, Mar. 27, 10:27 AM
- Four days after Piper downgraded EMC (EMC -1.5%) and rival NetApp to Neutral due to competitive concerns, Pac Crest has downgraded EMC to Sector Perform, while citing "increasing seasonal, secular and competitive risks."
- Pac Crest reports seeing "weak storage field checks in a seasonally slow first quarter," as well as "an increasing appetite" among customers to consolidate their storage resources. The firm also sees investments in new products limiting near-term earnings growth.
- Pac Crest was more bullish on EMC in January. It originally upgraded the storage giant to Outperform in June 2013, when shares were at a dividend-adjusted $23.66.
- Amidst the downgrades, EMC has launched its Federation Business Data Lake, a soup-to-nuts solution for companies launching big data/analytics projects that rely on data lakes - massive data repositories that holds data in its native formats. The solution combines servers from EMC's VCE unit and scale-out NAS storage from its Isilon unit, as well as VMware's virtualization software and Pivotal's big data software suite, which includes the Greenplum analytics database and a distribution of the popular Hadoop big data framework.
- EMC is also giving customers the option of using the Hadoop distributions of market leaders Hortonworks (HDP +0.7%) and Cloudera. Its solution acts as an alternative to data warehousing offerings from the likes of Informatica (reportedly in buyout talks) and Teradata (TDC -0.6%), which involve more heavily refining and structuring data. Teradata admits lakes can be implemented faster, support more data types, and provide cheap storage, but also argues warehouses are better for querying cleansed, structured, data.
Tue, Mar. 24, 12:49 PM
- A 1.6M-share Arista (ANET -2.7%) block trade (covers 2.4% of outstanding shares) was priced at $72.00 this morning, below a Monday close of $72.65. The data center switch upstart has fallen below $71 on a quiet day for equities.
- Some recent events: 1) Bernstein has speculated EMC, whose ties with Cisco have become strained, could make a bid for Arista in spite of its steep multiples. "Arista has leading network switch technology, has strong alignment with EMC’s software defined vision, and has strong technology talent and a good working relationship with VMware." 2) Juniper (NYSE:JNPR) has launched a line of data center spine switches (meant for leaf-spine network architectures), hoping to grab a chunk of a a market Cisco and Arista currently dominate.
Mon, Mar. 23, 10:01 AM
- Believing flash/hybrid storage array upstarts and cloud storage providers are eating into the companies' sales, Piper has downgraded EMC (EMC -0.3%) and NetApp (NTAP -1.7%) to Neutral, and respectively cut its targets to $27 and $36.
- Piper: "We continue to hear, Pure Storage and other vendors such as Nimble Storage (NMBL -1.1%) are making inroads into the installed base of EMC." The firm also sees price pressure intensifying - both cloud infrastructure giants and newer storage array providers have often been pricing aggressively. SanDisk is the latest example of the latter.
- Overall, Piper sees EMC better positioned to handle the threat than NetApp. It predicts NetApp (has been cutting costs) will be forced to up its sales/marketing spend, and expects this to "result in a significant reduction in earnings growth over the next two years."
- Yesterday: NetApp's FlashRay chief leaves for Pure Storage
- Two weeks ago: EMC looks to boost growth via 6 "strategic investments."
- January: Piper downgrades NetApp over "competitive risks"
EMC vs. ETF Alternatives
EMC Corp supports the businesses and service providers to transform information technology (IT) operations to an as a service model (ITaaS). It operates in three segments: EMC Information Infrastructure, Pivotal and VMware Virtual Infrastructure.
Other News & PR