EMC (EMC)’s stock was flat over the course of 2013. In fact, the stock has been flat over the past three years – sigificantly underperforming the near 50% gain in the S&P 500 Index. The stock has been buffetted over fears that the Company’s current decelerated growth is in secular decline due to a number of competitive threats. The first threat is that flash storage and software-defined storage will cannibalize traditional hard disk drives. Two, the public cloud is only a threat (and not an opportunity) that disintermediates information technology (IT) spend from both EMC and VMware (EMC maintains an over 80% ownership stake in VMW). Third, VMware’s entrenched vSphere gets displaced by Open-Source and Microsoft’s Hyper-V. Fourth, recent premium-priced acquisitions of Data Domain and Isilon are evidence of lack of internal product development.
EMC’s products – both hardware and software - are litearlly a geek’s wonderland alphabet soup, which include Storage Area Network (SAN), Network Attached Storage (NAS), Direct Attached Storage (DAS), Virtual SAN, All-Flash XtremIO, Atmos, Avamar, Data Domain, Isilon, Pivotal, ViPR Software Defined Storgae, VMAX, VNX, VNXe, VPLEX, VSPEX (none of these are typos). Information storage makes up 70% of revenues and virtualization 23% of revenues. Products generate 55% of revenues. Services generate 45% of revenues. The Company’s gross profit split is approximaltey 67% data storage and 31% virtualization. Continue Reading »