Through TheFLY's Eyes: EMC Corp.

from Theflyonthewall.com






EMC Acquires RSA Security

EMC (EMC) is down 7% to $10.47 at mid-day trading Friday after announcing Thursday night that it will acquire RSA Security (RSAS). This is another acquisition in which EMC is buying a quality company but in a relatively small revenue generating market. In a tech world where horizontally integrated companies tend to win, EMC appears to be becoming more and more vertically integrated.

Joe Tucci, EMC’s CEO, defined EMC as a company that is evolving from a storage company to an information infrastructure and life cycle management company. Therefore, the company is no longer a pure storage company.

EMC became a great stock during the 1990s by being focused on just the storage business. It appears that storage pricing pressure has been so great during the last five years that management is looking for ways to keep this a growth company. However, buying a bunch of niche companies in growth areas whose products can hopefully be cross-sold with EMC’s current product lines is not very much liked by the investment community.

EMC’s stock and strategy is appearing to be more and more like a tech company having trouble in the business that brought it to the top. EMC will have to register very large revenue growth to get investors interested in this stock again.