CNBC mentioned this in passing today since DELL is buying its own storage company (3PAR). I'm thinking of jumping in but wanted to get some other opinions. Anybody have any thoughts on somebody buying up EMC? There sure seems to be a lot of cash on the sideline these days.
Interesting notion. With CHINA pounding down doors left and right economically ( so far, thank god ) the future looks rather scarey. CHINA is going to want THEIR OWN everything, including tech. I would suggest the US will see consolidation in several business sectors (if not all) that have international exposure. From this angle, someone buying EMC/VMW looks like a pretty smart thing to do! I mean if one thinks the economy will recover than EMC/VMW is cheaper today than it will be in 3 years! Heres what I think happens to the tech sector. A consortium of tech should buy EMC/VMW and take them off the street. This consortium likely becomes one over time anyways, afterall, if we want to compete and sell in China's markets we're going to have to be cheaper or better and cheaper will never happen so guess what!? LOL! China has wised up, they can now fight the West via economics and if that fails, they have a military machine growing and waiting to be tested, sadly. American landscape will change, we will have fewer, but much larger of everything when it comes to corporations.
It is always thought that EMC would be the one bought out, maybe so. There is at least one poster on this board who predicted a buyout by the end of 2009 and a PPS of $22. Did not happen! While it is always difficult to predict the future when it comes to stock price or a buyout, there are still many options open including the possibly that in any large buyout that EMC may be the buyer instead of the seller. Some may remember that EMC took out Data General and that many of the current products in EMC's stable of products had their beginning in the Data General arena. Some who post here will immediately claim that I am again wrong on this idea if it does not happen, because that is the way they are. Their inability to even think outside the box is probably why they are failing to succeed. I sense that there will be further consolidation in the data storage area and that EMC will be a partner in that consolidation. They cannot see different alternatives that are possible, while they are the first to point the finger if it does not. A good move by EMC would be to take out NTAP. Their products would fit very well into EMC.
They will eventually get their wish about Tucci leaving, but that will be Tucci's decision. The succession of the next CEO has already been determined and the position will be filled by someone from within the organization, unless something drastic happens between now and that time.
IBM, HPQ, CSCSO, or ORCL all would be candidates and all have the ability. At $25, the value would be about $53 billion, including dilution from the convertible bonds. Back out net cash and the VMWare minority interest, and enterprise value is about $47 billion, or aound 12x forecast 2010 EBITDA. That's a little rich, but you would get control of VMW, one of the fastes growers in the space and of significant strategic value. Probably woldn't happen until the first tranche of debt matures in Dec. 2011.