EMC CorporationEMC

Morningstar Rating

Stock Research and Analysis

by Michael Holt

As businesses digitize everything from correspondence to confidential customer information, the amount of data to store, protect and archive is exploding. With an expansive customer base reluctant to switch vendors and a strong balance sheet to defend Read more

Bulls Say

With more than $6 billion in cash and equivalents and more than $2 billion in free cash flow, EMC has more resources than smaller competitors to pursue new technologies through acquisition and internal development.

New IT trends such as virtualization and the use of SSDs creates opportunities for EMC to expand in the market for high-end enterprise storage systems.

EMC's distribution network is anchored by a famously aggressive salesforce and powerful partners such as Dell. Smaller competitors will have difficulty competing with this distribution muscle.

EMC is introducing FAST, a storage technology that automatically moves data between fast expensive drives to cheap slower drives to maximize performance. This concept imitates the "secret sauce" of Compellent's arrays. Read more

Bears Say

Unable to organically develop a comparable data deduplication technology, EMC was forced to overpay for Data Domain to keep it out of the hands of rival NetApp.

The other established vendors (IBM, HP, Hitachi, and so on) enjoy many of the attributes that provide EMC with a narrow moat including switching costs, an established customer base, flush balance sheets, and strong distribution.

Despite speculation that there are interested would-be acquisitors, we expect EMC to retain control over its VMware subsidiary. As the market valuation for VMware grows, it can significantly distort the valuation of EMC for those investors looking for a pure-play storage company.

The largest cloud computing providers often build their own storage systems. If they begin to account for a greater percentage of enterprise storage, EMC may lose market share. Read more

Strategy

EMC continues to migrate from a hardware-led strategy to an integrated-solution strategy led by higher-margin services and software. Acquisitions help fill in holes in its product road map and defend Read more

Management

Joe Tucci has been CEO since January 2001 and serves as chairman of the board. David Goulden took over as CFO from Bill Teuber, who was promoted to vice chairman in 2006. We think Tucci and the rest of the management team are talented leaders with extensive Read more

Profile

EMC is a leading provider of hardware, software, and services for enterprise network storage. Historically focused on proprietary storage hardware, the company has recently Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Dodge & Cox: Valuations Attractive in Technology
Watch more