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"
Wed, Mar. 18, 5:43 PM
Wed, Mar. 11, 11:35 AM
- Believing positive catalysts are unlikely to impact shares until 2016 and that forex could lead to a slight 2015 guidance cut, Wells Fargo has downgraded EMC to Market Perform in the wake of yesterday's investor meeting, and cut its valuation range to $26-$28 from $31-$34.
- The firm still thinks a slew of positive catalysts are intact - they include VMware (NYSE:VMW), Pivotal, strategic investments, and expected cash flow growth. Pac Crest, William Blair, and Jefferies are defending EMC, citing (among other things) VMware and Pivotal's growth potential.
- EMC used the meeting to reiterate its cautious 2015 guidance and confirm it's not spinning off its VMware stake, while forecasting growth would return to double-digit levels by 2018 as businesses referred to as strategic investments come to account for a larger % of revenue. The storage giant thinks the businesses, which include VMware's NSX and AirWatch units, could contribute $0.50 to 2018 EPS.
- EMC is now down 7% over the last two days, and barely a dollar above a 52-week low of $24.92. Shares respectively trade for 13x and 12x 2015E and 2016E EPS. VMware has joined EMC in selling off.
- EMC/VMware's investor meeting slides
Tue, Mar. 10, 6:05 PM
- "February was a guidepost … The board has a process. I am not going to rush the board," EMC CEO Joe Tucci stated towards the end of his company's annual investor meeting. Back in 2012, EMC suggested Tucci, now 67, would retire by Feb. 2015.
- Tucci also confirmed (as previously reported by Reuters) EMC doesn't plan to spin off its 80% VMware (NYSE:VMW) stake. His presentation (.pdf) at the meeting was filled with slides trumpeting EMC's federation strategy (involves independently running EMC, VMware, and Pivotal).
- Meanwhile, EMC promised Pivotal's long-delayed IPO would eventually happen, and forecast the company would return to double-digit growth by 2018. 2015 and 2016 revenue growth consensus estimates are respectively at 6.7% and 6.1%, and EMC forecasts a 6% storage industry CAGR from 2014-2018.
- Central to EMC's efforts to boost growth are 6 "strategic investments": XtremIO (flash storage arrays), ECS/ScaleIO (scale-out storage hardware and software), Pivotal (analytics hardware/sofware, PaaS services), AirWatch (mobile management software), NSX (networking virtualization/SDN), and DSSD (flash arrays for high-performance workloads). EMC predicts those businesses will collectively see revenue rise from ~$1B in 2014 to ~$7B in 2018.
- Shares fell to $26.95 in regular trading. The Nasdaq dropped 1.7%.
- EMC's investor meeting slides
Sat, Mar. 7, 3:26 PM
- With Intel's (NASDAQ:INTC) Grantley Xeon CPU launch and Web data center investments offsetting weak high-end server demand, IDC estimates global server revenue rose 1.9% Y/Y in Q4 to $14.5B, and Gartner estimates it rose 2.2% to $14B; those figures compares with Q3 growth estimates of 4.8% and 1.7%, respectively.
- Likewise, IDC estimates global enterprise storage revenue rose 7.2% Y/Y in Q4, aided by Web investments and healthy demand for mid-range systems featuring integrated flash. Q3 growth was pegged at 5.1%.
- IBM had a rough time its both the server and storage markets: IDC believes its storage share fell to 9% (tied for #3) from 12.7% a year earlier, and Gartner estimates its server revenue fell 14% if one excludes Big Blue's x86 server unit, which was just sold to Lenovo. After accounting for the x86 sale, IDC estimates IBM's server share was at 13.7% (#3) vs. 26.8% a year ago.
- HP (NYSE:HPQ) fared a little better: IDC has its server share falling fractionally to 26.8% (still #1 overall), and its storage share falling to 13.8% (#2) from 14.1%. The company's x86 server unit has been gaining ground against IBM's former business, but its high-end server sales remain weak.
- Cisco's (NASDAQ:CSCO) UCS server line (recently refreshed) continues to gain ground: Its share rose to 5.3% (#5) from 4.5%, with full-year revenue pegged at $2.9B. With the help of aggressive pricing and x86 growth, Dell's server share rose to 16.7% (#2) from 15.2%, while its storage share slipped to 9% (tied for #3) from 9.2%. Lenovo (OTCPK:LNVGY) claimed a 7.6% server share (#4) thanks to the IBM deal, kicking Oracle (NYSE:ORCL) out of the top-5 along the way.
- EMC, whose high-end storage sales have been pressured (mid-range/flash demand has been better), saw its storage share drop to 22.2% (still #1) from 23.1%. NetApp (NASDAQ:NTAP), which posted an FQ3 miss and light guidance last month amid tough mid-range competition from EMC and others, saw its share drop to 7.2% (#5) from 8%.
- Not surprisingly, the white-label hardware beloved by Google, Facebook, Amazon, etc. continued to take share. IDC estimates such hardware, referred to as ODM Direct, claimed server and storage shares of 8.2% and 12.8% vs. 6.4% and 9.9% a year ago.
- Sales of x86 servers, the lion's share of which run on Intel CPUs, rose 7.1% to $11.5B. Sales of non-x86 servers fell 14% to $3B, thanks to declining demand for both mainframes and UNIX servers running proprietary RISC CPUs. "Early-stage revenue" was seen for ARM (NASDAQ:ARMH) servers, largely via HP's Moonshot line.
- Other companies with strong server and/or storage exposure: STX, WDC, SMCI, MLNX, AVGO, QLGC, RHT
Mon, Mar. 2, 4:39 PM
Fri, Feb. 27, 4:31 PM
- Reuters reports EMC has opted against spinning off its 80% VMware (NYSE:VMW) stake. EMC dipped slightly before the close on the report, but still finished up 0.4%. VMware finished up 1.3%.
- As it is, expectations for a spinoff occurring in the near-term have been low, particularly after EMC reached a truce with activist Elliott Management (has been pushing for a VMware spinoff) last month. The truce resulted in Elliott agreeing to standstill provisions through September, in exchange for EMC adding two Elliott-backed directors.
- Likely making EMC hesitant to go through with a spinoff: VMware, in spite of the headwinds faced by its server virtualization ops, is still easily outgrowing EMC's core storage hardware/software ops. VMware posted 16% Y/Y revenue growth in 2014, while EMC's Information Infrastructure reporting segment only saw 2% growth.
- EMC, for its part, often defends keeping its VMware stake by trumpeting product synergies between the companies.
Mon, Feb. 23, 12:07 PM
- Among the additions to the index (which fuels the IBLN ETF) are EMC, Google (GOOG, GOOGL), Goodyear (NASDAQ:GT), Mohawk Industries (NYSE:MHK), PVH, Time Warner (NYSE:TWX), and Yahoo (NASDAQ:YHOO). There are three health care additions as well: Allergan (NYSE:AGN), Amgen (NASDAQ:AMGN), and HCA. The lone energy name added is Consol Energy (NYSE:CNX).
- Exiting the index are energy names Halliburton (NYSE:HAL) and National-Oilwell Varco (NYSE:NOV), along with healthcare companies AbbVie (NYSE:ABBV), Aetna (NYSE:AET), Humana (NYSE:HUM), and Tenet Healthcare (NYSE:THC). Citigroup (NYSE:C), CBS, Crown Castle (NYSE:CCI), and Michael Kors (NYSE:KORS) round out those subtracted.
- IBLN tracks the highest-conviction S&P 500 picks by hot-handed billionaires who built their fortunes through hedge funds and investing. The list of billionaires tracked is updated each October, and the equity components are rebalanced each quarter after sifting through regulatory filings.
- IBillionaire Index Rebalance
Fri, Feb. 13, 7:22 PM
- Dan Loeb added new stakes in Citigroup (NYSE:C), Alibaba (NYSE:BABA), AIG, EMC and Allergan (NYSE:AGN) in the fourth quarter as the latest 13F from his Third Point fund indicates.
- The Alibaba addition of 2.8M shares to an existing 7.2M-share position brings Third Point to 10M shares. A new Citigroup position is 25M shares.
- Meanwhile, a 400K-share stake in Allergan is a new position, as is 7M shares in EMC and 3.5M shares of AIG.
- Loeb also unloaded a 750K-share position in FedEx (NYSE:FDX).
- Overall Third Point increased the value of equity holdings 27%, to $11.09B.
- After hours: BABA -0.5%; AGN +0.5%.
Thu, Feb. 12, 2:22 PM
- A slew of enterprise IT names are outperforming after Cisco beat estimates and respectively reported 10%, 8%, and 7% Y/Y growth in enterprise, SMB, and public sector orders. The Nasdaq overall is up 1%.
- Cisco reported particularly strong figures for enterprise-focused business lines: Switching revenue rose 11%, wireless (Wi-Fi-dominated) 18%, collaboration 10%, and data center (UCS servers) 40%. Service provider demand (orders -1%) remained soft.
- Enterprise standouts include EMC (EMC +2.5%), VMware (VMW +2.3%), SAP (SAP +3.1%), Salesforce.com (CRM +3.8%), NetSuite (N +2.6%), Teradata (TDC +4.6%), Splunk (SPLK +2.5%), Varonis (VRNS +3.9%), Gigamon (GIMO +2.8%), and NetScout (NTCT +2.7%).
- EMC's gains comes in spite of rival NetApp's FQ3 miss and soft FQ4 guidance; share loss to EMC, which has been seeing healthy mid-range and scale-out NAS storage growth, could be partly to blame. VMware is adding to the Wednesday gains seen following a Bernstein upgrade.
- Earlier: Telecom/networking stocks rally thanks to Cisco
Tue, Feb. 3, 2:52 PM
- VMware (VMW +0.7%) has launched vSphere 6, an anticipated update to the company's bread-and-butter server virtualization platform that's said to have 650+ new features. Among them: Better support for cloud apps, improved scalability and reliability for big data/analytics and database workloads, long-distance virtual machine migration, and the ability to rapidly clone/provision thousands of virtual machines and container instances.
- Getting a lot of attention: Virtual Volumes, a new set of storage APIs for vSphere that allows 3rd-party storage arrays - Dell, HP, IBM, EMC, and NetApp are on board - to become aware of virtual machines, thereby allowing them to provision capacity and services on a per-machine basis. VMware has also updated its Virtual SAN storage virtualization platform (has 1K+ paid clients), doubling the number of supported nodes to 64 and adding support for all-flash storage architectures.
- Other product announcements: 1) The vRealize cloud management platform has been updated. 2) VMware has unveiled its own distribution for the open-source OpenStack cloud infrastructure software platform (competes against VMware's vCloud Suite, has been widely adopted). 3) VMware has followed up on last week's vCloud Air service announcements by adding new hybrid cloud networking services.
- With soft vSphere demand taking a toll on VMware's bookings in recent quarters, the company is banking on vSphere 6 to drive a strong upgrade cycle, as well as keep Microsoft's Hyper-V and other aggressively-priced rivals at bay.
- While VMware's PR team goes into overdrive, Macquarie has upgraded parent EMC (EMC +1.2%) to Outperform: The firm cites vSphere 6, low expectations, and a belief storage spending will improve in 2015. VMware and EMC have both followed equity markets higher.
- VMware's August 2014 product launches: I, II, III
- Update: More VMware news: The company has bought Immidio, a developer of software that "provides a consistent and dynamic desktop experience that is independent of operating system, device and location." Immidio's offerings complement VMware's PC/app virtualization products.
Thu, Jan. 29, 10:07 AM
- With forex and VMware's soft outlook taking a toll, EMC (EMC - unchanged) is guiding for 2015 revenue of $26.1B and EPS of $1.98, below a consensus of $26.21B and $2.13.
- The company plans to buyback $3B worth of shares this year; VMware plans to repurchase at least $2B of its own shares. EMC spent $1.6B on buybacks in Q4, and $3B over the whole of 2014.
- The storage giant says it plans to cut jobs, but hasn't yet given a figure. Activist Elliott Management, which EMC just reached a truce with, has been pushing EMC to make changes.
- EMC's core Information Storage ops saw revenue rise 3% Y/Y in Q4 to $4.84B, with product revenue (drives future services revenue) rising 2% to $3.3B. High-end storage sales remained weak, falling 13% to $1.19B (contributed to the revenue miss).
- However, emerging storage (flash, scale-out NAS, object storage) revenue rose 52% to $800M. Unified and backup/recovery storage (includes mid-range NAS/SAN) grew 4% to $1.88B, and all other storage fell 4% to $960M.
- RSA revenue +5% to $290M; Information Intelligence (content management software) -1% to $170M; Pivotal (still awaiting an IPO) +18% to $65M.
- Gross margin rose to 65.4% from 64.6% a year ago, and op. margin to 28.9% from 27.4%. EMC ended 2014 with $8.3B in cash/short-term investments, $6.3B in long-term investments, and $5.5B in debt.
- Q4 results, PR, earnings slides (.pdf)
Thu, Jan. 29, 7:06 AM
Wed, Jan. 28, 5:30 PM
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Wed, Jan. 28, 10:08 AM
- Though VMware (NYSE:VMW) beat Q4 estimates and added $1B to its buyback, the company guided on its CC (transcript, earnings slides) for Q1 revenue of $1.49B-$1.51B and full-year revenue of $6.64B-$6.76B, below consensus estimates of $1.55B and $6.85B.
- Also: License revenue growth is expected to fall to 2%-3% in Q1 from Q4's 13%, and amount to 6%-9% for the whole of 2015. If not for forex, guidance would respectively be for 5%-6% and 9%-12% growth.
- VMware plans to buy back at least $1B worth of shares in 2015, up from 2014's $700M. The capex budget (boosted by cloud investments) is $400M.
- Given the outlook, and the fact that VMware's Q4 license bookings for products other than its vSphere server virtualization platform (when sold by itself) grew nearly 40% in Q4, traditional vSphere sales appear to be under heavy pressure. Microsoft has been claiming share gains for its Hyper-v platform, and open-source solutions (Xen, KVM) have also been gaining ground.
- On the bright side, end-user computing bookings (PC virtualization and AirWatch's enterprise mobility management offerings) rose over 60%. AirWatch now has 15K+ customers (declared by VMware to be twice that of its nearest rival), and saw over $200M worth of 2014 bookings.
- The NSX SDN/networking virtualization platform is on a $200M+ bookings run rate, and saw its paid customer count rise over 60% Q/Q in Q4 to 400+. Paid customers for the VSAN storage virtualization platform have topped 1K.
- Needham has downgraded VMware to Hold. Parent EMC (EMC +0.5%) is up moderately ahead of tomorrow's Q4 report, aided by a 1% gain for the Nasdaq.
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.
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