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News & Press: Colorado Technology Industry

EMC Will Seek More Acquisitions

Friday, July 23, 2010   (0 Comments)
Posted by: Su Hawk
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By SPENCER E. ANTE, Wall Street Journal

Joe Tucci, the chief executive of data-storage provider EMC Corp., said he would continue to hunt for small acquisitions but would also look at bigger deals if the right one appeared.

"My strong, strong preference is to do a string of pearls and go after the smaller companies with leading technology," Mr. Tucci said in an interview after the company reported second-quarter results. "If the right bigger thing came along and I thought it was incredibly accretive and we had the ability to digest it relatively quickly I would look at it."

In the second quarter, EMC reported its profit more than doubled as revenue jumped 24% to $4.02 billion.

Areas of interest to Mr. Tucci include companies developing technology in data storage, security, and virtualization—software that makes data centers more flexible. "A lot of companies will further our effort to capitalize on IT as a service," he said. "There are lots of things we want to do."

The company, which has $10.3 billion in cash, has made several acquisitions under Mr. Tucci, including the $2.2 billion purchase of data-storage company Data Domain last year and its 2003 acquisition of software maker VMware Inc. On July 6, EMC announced a small deal to acquire Greenplum Inc., a provider of data warehousing technology and analytics software.

Asked if EMC itself could be gobbled up by a bigger company, Mr. Tucci said it was unlikely. "It's not what I think will happen," said the CEO, whose company has a market value of about $40 billion. "It would be a big check for anybody."

Mr. Tucci said the company would continue to invest more in developing software that helps companies to manage and protect their vast troves of data. The company currently has 16,000 employees in product development, and 15,650 of them are focused on writing software. Only 350 are tasked with creating hardware.

"The future of our company is in software," Mr. Tucci said.

The company also said it expects to exceed previous forecasts for full-year profit and revenue, though it did not say by how much.

EMC has slashed costs and boosted revenue through a series of acquisitions, most recently Greenplum. It's benefiting from higher information-technology spending this year and customers' focus on data centers.

In the second quarter, EMC reported a profit of $426.2 million, or 20 cents a share, up from $205.2 million, or 10 cents a share, a year earlier. EMC's product-sales revenue rose 27% while services revenue climbed 17%.

Operating margin surged to 14.6% from 8%.

VMware, in which EMC still holds a majority stake, contributed $673 million to revenue. On Tuesday, the virtualization-software company reported its second-quarter profit more than doubled, as sales and margins rose sharply.

Write to Spencer E. Ante at
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