Mar. 13, 2014, 10:06 AM
- EMC's (EMC +1.8%) core Information Infrastructure ops (storage hardware/software, RSA) are "grossly undervalued" and chairman/CEO Joe Tucci will likely engineer a value-unlocking "structural change" before leaving in 2015, says Wunderlich's Kaushik Roy, while starting coverage at Buy.
- Roy thinks EMC is suffering from a "holding company" discount, and pegs the value of EMC and subsidiary VMware's (VMW +0.2%) Pivotal spinoff at $5B+. He also declares the company to be "evolving rapidly as technologies change" (previous), and predicts it can outgrow the broader IT sector.
- Separately, FBR's Daniel Ives has upped his VMware PT to $120 from $115, while stating checks have been "incrementally positive." Demand has been strong both from VMware's mainstay virtualization software, and for its software-defined data center initiatives.
- Ives also believes a strong ELA renewal cycle is helping VMware out, and that a broadening product set should strengthen the company's efforts to re-accelerate growth.
- Previous: EMC takes storage share in Q4
Mar. 7, 2014, 5:52 PM
- After falling 3.5% Y/Y in Q3, external disk storage system sales rose 2.4% in Q4, says IDC. The growth came even though sales of the servers that interact with these systems fell an estimated 4.4%.
- Total disk storage sales, which include storage subsystems found within servers, rose 1.3% in Q4 after dropping 5.6% in Q3. IDC attributes the turnaround to "traditional year-end budget flushes, improved economic sentiment, and a strong desire to address long-standing storage infrastructure inefficiencies."
- Market leader EMC, which posted strong Q4 numbers to go with light guidance, saw its external disk share rise 220 bps Y/Y to 32.9%, and its total disk share rise 200 bps to 25.8%. The gains largely came at the expense of restructuring IBM, whose shares respectively fell 190 bps and 200 bps to 13% and 14%.
- H-P's (HPQ) external disk share rose 30 bps to 9.6%, and its total disk share 40 bps to 16.3%. NetApp (NTAP), which delivered nearly in-line revenue and soft guidance last month, saw its external share fall 10 bps to 11.5%, and its total share stay flat at 9%. Private Dell's total share fell 140 bps to 9.9%.
- Hard drive/assembly suppliers: STX, WDC, HTCH
Feb. 25, 2014, 11:12 AM
- A day after posting an FQ2 beat, Palo Alto Networks (PANW -0.2%) has announced it's forming a new reseller deal with VMware (VMW, EMC), and that the companies have begun offering a solutions that meshes the former's virtualized next-gen firewall (runs on servers making use of virtualization software such as VMware's) with the latter's NSX network virtualization/SDN platform (announced last year)
- Palo Alto and VMware assert the solution, which also features management software and security services, allows for a single point of management for security services, policies, and threats. Earlier this month, Palo Alto expanded its partnership with Citrix to cover its virtualized firewalls.
- Palo Alto shares have largely shrugged off a valuation-driven downgrade to Hold from Gabelli today. The firm is upping its FY14 (ends in July) revenue estimate by $12M to $574M in response to the FQ2 report, but considers Palo Alto's fair value to be $70/share (7x FY15E EV/sales).
Feb. 14, 2014, 5:33 PM
- David Einhorn's Greenlight Capital established a 2.9M-share EMC position in Q4, as well as a 1.3M-share stake in SunEdison (SUNE) and a 4.2M-share stake in Take-Two (TTWO). At current levels, the positions are respectively worth $74M, $18M, and $80M.
- The Take-Two position translates into a 3.4% stake.
- Greenlight also discloses it owned 47.6M Micron (MU) shares at the end of Q4. That's up from the 23M shares it owned in late November, and is good for a 4% stake in the memory giant.
- Greenlight's Q4 13F
Feb. 10, 2014, 8:37 AM
Jan. 29, 2014, 9:42 AM
- Though it beat Q4 estimates, EMC (EMC -1%) is guiding for 2014 revenue of $24.5B and EPS of $1.95, below a consensus of $24.96B and $2.04. EMC is also guiding for Q1 revenue of ~$5.39B and EPS of $0.35, below a consensus of $5.81B and $0.43.
- Q4 results were solid. Total product revenue, including that of subsidiary VMware, rose 11% Y/Y in Q4 to $4.16B. Services revenue rose 10% to $2.53B.
- In addition, EMC's core Information Storage unit (71% of revenue) saw its sales rise 10% Y/Y after growing just 1% in Q3 (hurt by federal weakness). Emerging Storage products (includes Isilon scale-out NAS systems, Atmos cloud storage, and XtremIO's flash storage) grew 73% to $560M. Unified and backup/recovery storage sales (includes mid-range hardware) rose 11% to $1.87B after growing just 3% in Q3, and high-end storage rose 1% to $1.28B after declining 8% in Q3.
- EMC and VMware's (VMW -1.1%) Pivotal unit, which is set to go public, saw its sales drop 6% Y/Y to $91M. EMC's RSA unit saw sales rise 17% to $275M in spite of a recent NSA-related controversy.
- Gross margin fell 160 bps Y/Y in Q4 to 64.6%. EMC spent $3.01B on buybacks in 2013, and expects to spend $2B in 2014. 2013 free cash flow totaled $5.5B, above net income of $3.9B.
- Yesterday: VMware offers soft margin guidance with Q4 results.
- PR, financials, slides
Jan. 29, 2014, 7:09 AM
Jan. 29, 2014, 12:05 AM
Jan. 28, 2014, 5:30 PM
Jan. 28, 2014, 5:25 PM
- VMware (VMW) guides in its Q4 earnings slides for Q1 revenue of $1.33B-$1.37B and 2014 revenue of $5.94B-$6.1B (+14%-17% Y/Y), in-line with consensus estimates of $1.35B and $5.99B.
- However, license revenue (drives future service revenue) is only expected to grow 12%-14% Y/Y in Q1 (down from a Q4 rate of 15%), and 12%-16% for the whole of 2014. In addition, VMware is guiding for a 2014 op. margin ~31%, down from a 2013 level of 34%. Investments in newly-acquired AirWatch (not expected to be accretive until late 2015) are a likely factor.
- Q4's top-line figures (both for total and license revenue) matched those provided last week at the time of the AirWatch announcement.
- VMware notes end-user computing (PC virtualization/mobile software) was an area of strength in Q4, with license bookings rising nearly 30%. That could be a positive for rival Citrix (CTXS), which reports tomorrow. Management/automation licenses (tied to VMware's vCloud suite) rose over 40%.
- The flip side of these numbers: VMware's server virtualization license bookings growth may have been below 10%. Microsoft's Hyper-V (bundled with Windows Server) has been taking virtualization share.
- VMware's unearned revenue balance rose 18% in 2013 to $4.1B. Full-year free cash flow was $2.19B, well above net income of $1.46B. $116M was spent on buybacks in Q4.
- Parent EMC, which reports tomorrow morning, is off in sympathy.
- Q4 results, PR
Jan. 22, 2014, 9:45 AM
- VMware (VMW -1.2%), parent EMC (EMC -1.3%), Citrix (CTXS -2%), and SAP (SAP -1.5%) are all lower following news of VMware's $1.54B acquisition of leading mobile device management (MDM) software firm AirWatch.
- Citrix (thanks to the Zenprise acquisition) and SAP (through its Sybase unit) compete with AirWatch. As does BlackBerry (BBRY +4.6%), which remains higher following news of its real estate sale plans.
- AirWatch's products, which also include mobile app management and security solutions, complement VMware's Horizon Workspace, which provides a secure, siloed workspace for business apps and files on mobile devices. With Citrix and SAP already offering an array of complementary mobile software tools for enterprises, VMware's move is in part an attempt to keep pace.
- AirWatch, Citrix, SAP, and BlackBerry, along with other firms such as IBM (previous) and Good Technology, are trying to profit from growing enterprise interest in MDM solutions, which help companies cope with the ongoing bring-your-own-device (BYOD) trend.
- In tandem with the acquisition, VMware has reported preliminary Q4 revenue of $1.48B (+15% Y/Y), slightly above a $1.47B consensus. Q4 license revenue is expected to come in at $$687M (+15%), within a guidance range for 12%-16% growth. VMware's full Q4 results are due on Jan. 28.
Jan. 22, 2014, 7:19 AM
- VMware (VMW) has agreed to acquire privately held AirWatch, a provider of corporate mobile-management and security products, for $1.175B in cash and $365M of installment payments and assumed unvested equity.
- AirWatch has over 10,000 customers globally and more than 1,600 employees.
- VMWare will fund the deal through cash on hand and $1B of additional debt from EMC (EMC). (PR)
Jan. 17, 2014, 11:37 AM
- Intel's (INTC -3.6%) partial blaming of weaker-than-expected Q4 server CPU division sales (revenue +8% Y/Y, but volumes only +1% Y/Y and -3% Q/Q) on a government shutdown comes across as a "bad excuse," thinks FBR.
- Though reiterating an Outperform, FBR is skeptical about Intel's long-term 15% revenue CAGR target for its server CPU division. Bernstein questioned the division's growth outlook yesterday afternoon.
- Goldman, reiterating a Sell (previous), says Intel's numbers "confirm our view that there is downside, not upside, to Intel's 2014 EPS." It's worried about both server CPU sales and a softening corporate PC upgrade cycle (driven by the Windows 7 transition) following Q1.
- JPMorgan, which upgraded Intel going into earnings, is defending the company. It's pleased with stabilizing PC demand and dismisses server concerns, given sales have historically been volatile.
- A major headwind faced by Intel's server CPU unit: Server industry revenues have been steadily declining, as demand shifts towards Web/cloud service providers with bigger economies of scale and a penchant for using cheap white-label hardware. IDC estimates total server sales fell 3.7% Y/Y in Q3, and that x86 server sales rose just 2.8%.
- Microsoft (MSFT -1.6%) and AMD (AMD -1.1%) are ticking lower following Intel's report. So are server virtualization kingpin VMware (VMW -1.9%), parent EMC (EMC -0.9%), and rival Citrix (CTXS -0.8%). Intel suggested on its CC virtualization growth is softening.
- More on Intel's Q4, CC transcript
Jan. 8, 2014, 5:39 PM
- EMC, no stranger to executive shakeups, has named CFO David Goulden the CEO of its mainstay Information Infrastructure (storage hardware/software and RSA) division. Goulden has already been responsible for the division's operations since July '12. (PR)
- The Information Infrastructure unit accounted for 75% of EMC's Q3 sales. With demand pressured by industry weakness and slumping U.S. federal orders, the division's revenue rose only 1.5% Y/Y during the quarter.
Dec. 30, 2013, 7:46 PM
- As part of its major Domain 2.0 infrastructure project, AT&T (T) has sent a request for information (RFI) to equipment suppliers asking them to submit ideas and architectures that support software-defined networking (SDN) - the shifting of network intelligence to software-based controllers that interact with switches/routers.
- MKM's Michael Genovese predicts AT&T's RFI will likely "have significant long-term consequences" for the telecom equipment industry. He sees the impact being "most negative" for Cisco (CSCO), and a positive for Ciena (CIEN), F5 (FFIV), Finisar (FNSR), and early data center SDN software leader VMware (VMW, EMC)
- AT&T, like others, is enthusiastic about SDN's potential to lower management costs, improve network efficiency, speed the provisioning of new services, and allow "white box" switches/routers to take the place of proprietary hardware.
- The last feature has many Cisco investors nervous, given its potential to increase competition and pressure margins. John Chambers has declared white box hardware (already embraced by many Web/cloud companies) to be a major long-term threat.
- Cisco is counting on its powerful Insieme hardware/software and ACI architecture (meant to adapt to the needs of apps/services) to help neutralize the SDN threat. But Genovese thinks ACI "seems too complex and proprietary compared to more white box-oriented architectures."
- Regarding VMware, Genovese believes the company's NSX platform (combines SDN with other features) has "a strong chance of being selected as the Data Center virtualization platform." Strong uptake is expected for NSX, which has won the support of many Cisco rivals, starting in 2015. Major carrier SDN adoption is expected to arrive later.
Dec. 23, 2013, 6:16 PM
- Reuters reports the NSA "arranged a secret $10 million contract" with EMC's RSA security hardware/software unit with the goal of creating an encryption backdoor that wound up being distributed via RSA's Bsafe cryptography libraries.
- RSA denies entering into a secret contract, and says its "explicit goal has always been to strengthen commercial and government security." But the company doesn't deny taking money from the NSA. GigaOm: "So who’s telling the truth here? Potentially everyone (barring the NSA, of course)."
- Several current/former RSA employees tell Reuters the company was misled by the government, which portrayed the random number-generation algorithm featuring the backdoor as a "secure technological advance." RSA urged its clients to stop using the algorithm in September, after the first reports of a backdoor emerged.
- RSA has been a bright spot for EMC as the company deals with slumping storage hardware demand. RSA's sales rose 11% Y/Y in Q3 to $250M.
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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