![]() ![]() ![]() And after starting off selling to smaller companies, the bigger ones are willing to risk their operations on a start-up because they see themselves missing out on huge economic advantages. The 400-employee company told me in June that it is beginning to win business with the world’s largest companies. The bigger problem EMC faces is that new competitors are emerging that simply offer customers a better value.Ī case in point is Waltham, Mass.-based data storage appliance maker, Actifio, which recently raised $100 million at a $1.1 billion valuation. One analyst, Macquarie told Bloomberg that “the content management and security divisions are less integral to EMC and spinning off those assets is an alternative that could create $5 billion for shareholders.” EMC’s stock has been dead money for years – its stock was up a mere 1% in the three years before reports of Elliott's stake while the S&P 500 rose 52%. I do agree with the intent behind Elliot Management’s action though. We have this federated model where each company has it strategic role, we’re independent, we’re loosely coupled and we go out and execute like crazy. In a recent interview with Network World, VMware chief Pat Gelsinger said that the federation approach is working well. Noted Burton, "A Pivotal customer can use EMC, Amazon or Azure." Pivotal offers companies that want cloud services great flexibility in EMC's view. So I just think it's better together," according to Bloomberg. Indeed in May 2014, EMC CEO Joe Tucci said, "If you break it up, you just weaken every part. VMware's software lets computers run different operating systems and helps EMC beat Oracle, Cisco Systems Inc. One example of this Federation strategy is Pivotal - an EMC/VMware cloud computing joint venture. Simply put, this so-called Federation between the software and the hardware helps increase EMC’s profits. What this means here is that if a company buys VMWare’s software, it is much more likely to purchase EMC’s hardware as well. Moreover, there may be what corporate strategists call interrelationships between VMWare’s software and EMC’s hardware businesses. After all, investors in EMC stock also get the value of its VMWare stake. We think that this approach will help us tap into emerging technologies."īloomberg reported that five analysts' average estimate is that such a sale could “unlock more than $10 billion in shareholder value.” I am not exactly sure what this means. Burton explained, "VMware is like Switzerland - it is neutral among different hardware vendors which means that a VMware customer can buy hardware from EMC, Dell, Hitachi, or Netapp. And the $600 million we invested in VMware is now worth $39 billion."Īnother benefit of the Federation strategy is that it gives customers much more flexibility. We were able to attract great talent to VMware that way - giving them equity in a startup and later exposing a portion of it to the public markets. According to a July 23 interview with Jeremy Burton, EMC's President, Products and Marketing, "The Federation strategy is a way for EMC to attract the best talent to run businesses that take advantage of emerging technology trends. had acquired a $1 billion stake in EMC.Įlliot Management – which is most famous for pushing Argentina to pay back the money it borrowed from his firm – now wants EMC – with a market capitalization of $58 billion – to spin off its 80 percent stake in VMware.ĮMC offered a defense of its Federation strategy. And a nice chunk of that rise – adding about $3 a share or about an 11 percent pop - came July 21 when word leaked out that a New York hedge fund, Elliott Management Corp. Since then, EMC stock has had a nice run and it now sits at about $28. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |