Confirming earlier rumors,
) recently announced the acquisition of Israeli flash storage
company XtremIO. Israeli business news web site Globes says that
EMC is paying approximately $430.0 million. However, the company
refused to confirm the payout, saying that the all-in-cash
transaction would not have any material impact on its fiscal 2012
Founded in 2009, XtremIO has operations in San Jose, California.
The company received funding from a number of venture capitalists
including Jerusalem Venture Partner, Giza Venture Capital, Battery
Ventures and Lightspeed Ventures. Although the company is yet to
record any storage revenue, its unique products have garnered
significant attention in the flash storage market in recent
As the data explosion continues with higher adoption of cloud
computing and big data, flash storage has been touted as the best
solution to take care of the demand for higher speed and
performance at the same cost as disk arrays. XtremIO specializes in
developing all-Flash storage arrays, a much sought-after technology
for traditional storage companies such as EMC and NetApp.
XtremIO's flash storage arrays, instead of focusing on improving
cache performance, acts as primary storage for applications
requiring high speed, such as cloud computing and virtualization.
This decreases fetching time, thereby increasing speed. Further,
XtremIO's flash arrays are built on low-cost MLC flash technology,
which will make it more cost effective in our view.
EMC has a dominant position in the flash drive market, shipping
approximately 24 petabytes (PB) of flash drive to customers in
2011. The acquisition is expected to boost EMC's flash based
storage product portfolio going forward. We believe that the
acquisition will expand EMC's customer base and market share, due
to the higher demand from enterprises going forward.
Moreover, we believe that the acquisition will provide EMC a
significant competitive edge in the storage market where it faces
significant competition from
), Hitachi and
). However, we also believe that the low-cost flash array products
can cannibalize sales of EMC's VNX disk array product over the long
Thus, we remain Neutral over the long term (6-12 months).
Currently, EMC has a Zacks #2 Rank, which implies a Buy rating in
the near term.
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