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$11.75 -0.14 (-1.18%)
1/9/2009 4:00 PM

EMC Corp (EMC)

CAPS Rating:
*****

The Company develops, delivers and supports the Information Technology industry's range of information infrastructure technologies and solutions that are designed to help individuals and organizations handle its digital information needs.

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Avatar msrs2k (59.26) Submitted: 8/15/07 3:17 PM : Outperform Start Price: $18.74 EMC Score: 0.89

With VMWare post IPO trading around 50, EMC's share of VMWare is worth about 16bil. Given that, I expect EMC's intrinsic value to be in the low 20s. This will float around quite a bit with VMWare's fortunes.

VMWare has a several year head start in a very valuable market, but the barrier to entry is not that high and several hungry competitors will be coming along soon. Still, the first mover advantage is huge here. I don't have any idea how to value VMWare, but I think they are in good shape for a few years.

I'd like to see EMC announce a policy of selling VMWare shares to buy back EMC shares, but there is a limit to the number of shares EMC can sell for several years due to SEC reasons.

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Avatar msrs2k (59.26) Submitted: 8/21/07 12:50 PM

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Correction: EMC takes a tax hit if they sell VMW before 2009 - 5y after the company was purchased. Hopefully VMW's market cap will increase between now and then. Then EMC will begin selling to buy back EMC.

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