EMC's third-quarter earnings missed the Zacks Consensus Estimate
while revenues beat. Upbeat forward guidance was supported by
customer wins, strong backlog, high-end product launches and
VMware. EMC's strategic acquisitions, partnerships and product
breadth focusing on the third generation IT platform (Big Data,
predictive analytics and mobile computing) will help enterprises
move to the cloud, thus driving its long-term growth. However, EMC
faces significant competition in storage, cloud computing and Big
Data markets, which along with the sluggish IT spending, pricing
pressure and increasing activism from Elliot Management will
continue to pressure the stock. Thus, we maintain our Neutral
recommendation and set a price target of $31.00.
Incorporated in 1979 and headquartered in Hopkinton, MA, EMC
Corp. (EMC) offers storage and security solutions for every layer
of IT architecture. The company's evolving product portfolio is
focused on providing the infrastructure for Cloud Computing and Big
EMC reported revenues of $23.22 billion in fiscal 2013. The
company's product sales, comprising systems and software licenses,
contributed 59% of 2013 revenues, while Services revenues,
comprising software maintenance, installation services,
professional services, hardware maintenance and training services
accounted for the remaining 41%.
EMC operates through three segments EMC Information
Infrastructure (76.5% of revenues), Pivotal (1.3% of revenues) and
VMware (19.2% of revenues).
The EMC Information Infrastructure business consists of three
business units, namely, the Information Storage business, the RSA
Information Security Segment and the Information Intelligence Group
The Information Storage business helps to store and protect
information and derives revenues from storage systems, storage
software and related customers. The information storage systems can
be deployed in storage area network (SAN), networked attached
storage (NAS), unified storage combining NAS and SAN, content
addressed storage (CAS) and direct attached storage (DAS)
RSA Information Security business is the security division of
the company that offers solutions in security management and
compliance, including enterprise governance, risk and compliance,
data loss prevention, security information management, continuous
network monitoring and fraud protection. The segment's products
also encompass identity management and protection, which include
identity assurance and access control, encryption and key
The Information Intelligence Group provides software, solutions
and services that help customers to collaborate, manage, access,
distribute and control information securely from anywhere, at any
time and from any device.
Pivotal formed in the second quarter of 2013 comprises strategic
technology, people and programs from Greenplum, Cloud Foundry,
Spring, Cetas, Pivotal Labs, GemFire and other products from the
VMware vFabric Suite. The company was formed with investments from
EMC, VMware and General Electric. Pivotal offers an integrated
technology platform that supports cloud computing and Big and Fast
VMware Virtual Infrastructure business is represented by EMC's
majority equity stake (80%) in VMware. The company is a leading
provider of virtualization and virtualization-based cloud
infrastructure solutions. Its offerings support Software-Defined
Data Center, End-User Computing and Hybrid Cloud Computing.
Successive acquisitions have helped the company build a strong
portfolio of products, which provide tough competition to large
software vendors. EMC competes with large companies such as IBM,
NetApp, Hewlett-Packard and Hitachi Data Systems.
EMC Corporation (EMC): Read the Full Research
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
EMC CORP -MASS (EMC): Free Stock Analysis
To read this article on Zacks.com click here.