EMC Corp (EMC)

OverlandParker (< 20) Submitted: 11/16/07 3:43 PM

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Here is an update to my post with current numbers and taking into account the recently announced $2B EMC share buyback. These estimates are also after VMW is about 20% off of its highs and you can still see that EMC is cheaper now then it was when I first posted this pitch.

The current Market Cap of VMW is $32.26 Billion, Emc owns 85% of that so that makes Emc's market cap interest in VMW at about $27.42 Billion(32.26 X .85).

Lets just take that market cap right off of the top of EMC's current market cap but keep the current amount of outstanding shares the same. $40.60B (EMC's market cap) - $27.42B (the market cap of EMC's ownership in VMW) = $13.18B. Now take that amount and subtract the recently announced $2B EMC share buyback. $13.18B - $2B = $11.18B

A $2B buyback at todays price would mean that they could buyback around 103.5 Million shares. Lets subtract that 103.5M shares from the 2.1B shares outstanding and you get 1.9965B shares outstanding.

Now take that $11.18B and divide it by the estimated outstanding shares after the Buyback $11.18B / 1.9965B and you get $5.60 per share.

At $5.60 per share that would make the current P/E 8.62 and the forward P/E 6.67. A 6.67 forward P/E on a stock that has a growth rate of 14.19%. That gives you a PEG of .47

I believe there is a $19 veil over a stock that is really only trading at around $5.60 that people just are not seeing at this point. The more VMW's market cap grows, the lower this number is going to get(as you can see by my updated numbers) and the more I will be buying for my porfolio.

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JesperA (55.75) Submitted: 1/11/08 11:29 PM

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I believe EMC owns 32.5 million shares of VMW, or 8.5% of the shares outstanding, as opposed to 85%. Check Yahoo Finance for info on VMW. Yahoo's numbers seem to add up for VMW, so EMC owns "just" $2.5 billion worth of VMW (at $77.53).

Running these numbers through your calculations would leave EMC to be worth about $15.50 a share - darn close to the $16 or so they've traded at recently. Perhaps EMC is "fairly valued" at around $16?

I like EMC - I'm buying for my real portfolio.


Jesper

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OverlandParker (< 20) Submitted: 1/19/08 12:30 AM

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Jesper, I appreciate your due diligence but I can assure you with the utmost confidence that EMC owns 86% of VMW, I did not forget a decimal. EMC spun off 14% or VMW last Aug and kept 86% of the outstanding shares. If you still do not believe me, just Google: EMC 86% VMW and see what comes up.

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piemike (99.45) Submitted: 1/23/08 12:48 PM

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It's 86%. Here it is right from the horses mouth. Read the second answer in the Q&A from EMC investor relations:

http://www.emc.lu/ir/faq/vmware_ipo.jsp

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PViddy (< 20) Submitted: 2/07/08 4:51 AM

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Yes, I would like to buy EMC for $7. But I can't, at least not without buying into VMW also. In fact, I'm spending more money on VMW than EMC in this scenario. Since VMW is a stock with a 100 P/E ratio, this doesn't quite sound like a value play to me. What is the PEG for VMW?

This whole thing is predicated on VMW being worth its current market price. If it lives up to expectations, it just might be. But unless they give those shares to the EMC shareholders, there is no way to unlock that value directly.

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