CAPS Rating: 5 out of 5

EMC is a leading provider of network storage, backup software, and other information technologies.


Player Avatar portefeuille (99.66) Submitted: 5/29/2009 4:16:26 PM : Outperform Start Price: $11.38 EMC Score: +29.49

see the preliminary "pitch" here:

Report this Post 17 Replies
Member Avatar portefeuille (99.66) Submitted: 5/30/2009 12:15:38 PM
Recs: 1

from that "pitch":


Now the revenue numbers ($B) from 2002 to 2006 (years with no or very little revenue from VMW) from the 10-Ks:

year rev. EMC, rev. VMware Virtual Infrastructure segment, rev. stub

2002 ca. 5.438, 0, 5.438 the 2002 ("multi-year"-) low of EMC (close to EMC stub, no VMware before 2004, little if any "cash minus debt") was at $3.67 on October 4, 2002

2003 ca. 6.237, 0, 6.237

2004 ca. 8.230, 218, 8.011 (VMware was acquired in January 2004)

2005 ca. 9.664, 387, 9.277

2006 ca. 11.155, 0.709, 10.446

2007 ca. 13.230, 1.321, 11.909

2008 ca. 14.876, 1.877, 12.999

All I am trying to say is that you can get the EMC stub almost at around the price it had at the 2002 crash low, making about twice the revenue. And net loss per share (diluted) in 2002 was 0.05.

It was around $0.50 (again:I would have to look into that. Just a wild guess, it was $0.64 including VMware ...) in 2008 and should about stay there in 2009.

So again the take-away:
Get the stub with revenue08 of $12.999 B vs. revenue02 of $5.438 B and EPS08 of +0.50 vs. EPS02 of -0.05 at close to the 2002 crash intraday-low price.

(Of course there is no way to really buy the EMC stub. You can "short out" the VMware part, but not the ("cash minus debt"). okay maybe one way: Buy the company and sell VMware, but I doubt you would get it for the $11.59 per share it is currently trading at. oh well ... just buy EMC. VMW is not really overvalued, I think ...)


In 2002 the 10-K shows as "cost and expenses" "Restructuring and other special charges" ca. $0.15 B. "Taking that out" you still end up with a loss before taxes and the EPS02 would have been below $+0.05, I guess ...

Member Avatar portefeuille (99.66) Submitted: 9/27/2009 5:12:36 PM
Recs: 1

EMC Corporation

Our second largest investment is our stake in EMC. We invested in EMC because of the high
quality nature of the company’s two principal business lines – the Information Infrastructure and
Virtual Infrastructure businesses – and our ability to acquire a position at a substantial discount
to our estimate of fair value.
Each of EMC’s Information Infrastructure’s three segments – Information Storage, Content
Management and Archiving, and RSA Information Security – leads the market in which it
competes. Because of the extremely high compound growth rate in data globally – estimated by
industry experts at 60+% per annum; (think saved YouTube videos and regulatory requirements
to preserve documents and data), we believe that demand for data storage over the long-term is
largely insensitive to the economy. As a result, we expect that EMC’s dominant market position
in Information Infrastructure will continue to allow it to generate growing, and predictable free
cash flow from new product sales, recurring maintenance and warranty revenues, and the sale of
consumables. The company also benefits because of its substantial operating leverage from
economies of scale, large barriers to entry, and economies of scope, where the breadth of the
company’s product offering is a significant competitive advantage.
EMC’s customers are diverse by industry and geography and enjoy efficiencies from
concentrating their infrastructure spending on a small number of market leading vendors such as
EMC. Its customers are also highly risk averse, as data storage is a critically important function
for regulatory and competitive reasons, and customers face significant costs if they switch to an
alternative vendor.
Information Infrastructure enjoys the benefits of both the inherent operating leverage of the
software business with the high switching costs of the hardware business. Because EMC’s
Information Infrastructure hardware is built from the assembly of components manufactured by
multiple, highly competitive, third-party suppliers, EMC does not suffer the inventory risk,
capital intensity, and supplier negotiating power of traditional hardware businesses.
EMC’s off-balance sheet assets include a large base of satisfied customers that are receptive to
additional offerings from EMC, and a sales force that is considered by many to be the best in the
information technology industry. Combined, these assets facilitate EMC’s expansion into
adjacent markets.
The rapid adoption of virtualization and cloud computing led by EMC’s 84% owned, publicly
traded VMware subsidiary – we are rapidly moving to a world in which you will simply rent
your computing power and storage from third parties and you will no longer have that noisy,
heat-generating, power-consuming box under your desk – increases the demand for EMC’s
offerings, while improving EMC’s opportunity to differentiate its offerings and maintain its
VMware is driving a transformation of the information technology industry, and in that process
we expect it will capture large profits over time. We believe that the VMware can ultimately
enjoy a market position and economics similar to that enjoyed by Microsoft’s Windows x86
server and desktop operating system.
We attribute EMC’s substantial stock price appreciation in recent weeks to the market’s
recognition of a recently completed strategic acquisition, better-than-expected second quarter
operating performance, and the continued business progress of VMware.
We believe that EMC is undervalued on a sum-of-the-parts basis, and that the value of its two
core operating segments will continue to increase at an attractive rate.
(from here: Pershing Square Q2 2009 Investor Letter -> http://dealbreaker.com/images/thumbs/Pershing%20Square%20Q2%202009%20Investor%20Letter.pdf)

Member Avatar DMillsap (26.82) Submitted: 12/17/2009 1:30:05 PM
Recs: 0

Hi Port,

Do you have any update on EMC? This stock hasnt done much in the last couple months. I remember you saying this was your largest holding. Is that still the case? Any thoughts on the future of this company?

Member Avatar portefeuille (99.66) Submitted: 2/4/2010 10:33:32 PM
Recs: 0

yes, it is still my largest position.
a thought on the future of this company. someone buys them for $35 per share or more in 2010. or someone buys VMW for $100 per share or more in 2010. or maybe not.

Member Avatar portefeuille (99.66) Submitted: 11/25/2010 1:15:50 PM
Recs: 0

currently 4250 shares in my portfolio.

Member Avatar portefeuille (99.66) Submitted: 12/9/2010 4:11:16 PM
Recs: 0

currently 2600 shares in my portfolio.

Member Avatar portefeuille (99.66) Submitted: 12/13/2010 10:00:08 AM
Recs: 0

currently 2300 shares in my portfolio.

Member Avatar portefeuille (99.66) Submitted: 12/16/2010 10:15:55 AM
Recs: 0

currently 1900 shares in my portfolio.

Member Avatar portefeuille (99.66) Submitted: 12/28/2010 11:52:16 AM
Recs: 0

currently 1450 shares in my portfolio.

Member Avatar portefeuille (99.66) Submitted: 1/7/2011 11:23:54 AM
Recs: 0

currently 1650 shares in my portfolio.

Member Avatar portefeuille (99.66) Submitted: 1/10/2011 9:48:02 AM
Recs: 0

currently 1200 shares in my portfolio.

Member Avatar portefeuille (99.66) Submitted: 1/22/2011 6:14:00 PM
Recs: 0

I no longer update my portfolio positions.

Member Avatar portefeuille (99.66) Submitted: 3/10/2011 12:25:05 AM
Recs: 0

see this post.

Member Avatar portefeuille (99.66) Submitted: 12/16/2011 12:25:07 AM
Recs: 0

There are currently 97000 shares in my "fund" with break-even of around 21.68 USD. http://caps.fool.com/Blogs/fund-trades/678775.

Member Avatar portefeuille (99.66) Submitted: 1/12/2012 8:39:25 PM
Recs: 0

now 94000 shares in the fund with break-even of around 21.66 USD.

Member Avatar portefeuille (99.66) Submitted: 1/12/2012 8:39:43 PM
Recs: 0

now 94000 shares in the fund with break-even of around 21.66 USD.

Member Avatar portefeuille (99.66) Submitted: 3/14/2012 1:17:19 PM
Recs: 0

now 8300 shares in the fund with break-even of around -19.42 USD.

Featured Broker Partners