Seeking Alpha: The Dell And Market Pessimism For EMC Is Too Much

Buyouts are generally supposed to produce upside for the shareholders of the company being acquired, but that hasn't been the case for EMC (NYSE:EMC) since the company announced its merger agreement with Dell back in October of 2015. While it has indeed been a lousy market for a few months now, EMC's 12% drop since the time of the deal is worse than the performance of the Nasdaq, as investors have grown increasingly worried about the weak performance of EMC's storage business, the poor performance of VMware (NYSE:VMW), and concerns that the deal may not go through at all.

I believe that the deal gets done, but even if it does not, I believe EMC would walk away with at least $4 billion in cash in its pocket and an underestimated PaaS business in Pivotal. I wouldn't expect EMC's reported storage results to improve much until mid-2016, but with a stand-alone value above today's price and very low implied value to VMware, I believe there's still upside in these shares that is worth the risk that the deal unravels.

Read the full article here:
The Dell And Market Pessimism For EMC Is Too Much

Seeking Alpha: EMC Corp Sticking To Its Guns

Right or wrong, EMC (NYSE:EMC) is committed to its path of evolving into a leading provider of "IT-as-a-service". Likewise, the company remains committed to an operating structure that is going to continue to frustrate some investors, as it believes (correctly, in my view) that VMware (NYSE:VMW), Pivotal, and other components are vital to its future strategy.

The problem is that EMC is not delivering all that much right now. Reported margins are unimpressive and the company is on a downward slide in several productivity and inefficiency measurements. I believe that this is a product of the company investing substantial sums today to generate revenue and profits down the line, but I won't deny that there's a strong element of "You gotta just trust me on this..." that does not make for an airtight investment thesis. I continue to believe that EMC is undervalued on relatively modest expectations, but it increasingly looks to me that EMC is at least a year away from being able to deliver the sort of results that will quiet critics and encourage its long-term shareholders.

Follow this link to continue:
EMC Corp Sticking To Its Guns

Seeking Alpha: Can Cisco Pull Its Weight As A Barbell-Type Pick?

A stock like Cisco (NASDAQ:CSCO) isn't really part of my normal beat, as I prefer to write about far more obscure companies. And yet, I do like to have stocks like Cisco in my portfolio - I find a lot of value in looking for well-established companies trading below long-term fair value, as I find they help reduce the volatility in portfolios that include far riskier stocks. This is basically a barbell strategy where one "bulge" is higher quality, lower-risk picks and the other is lower quality, higher-risk picks; when you can get a better return out of the high-quality end, it can really add to your returns.

In my view, Cisco seems like a reasonable (if imperfect) candidate. It doesn't take particularly generous assumptions to drive a fair value about 10% above today's level, but if management can cut costs and/or drive better sales of higher-margin products, there could be worthwhile upside. There is a well-known and widely reported risk that the basic operating environment Cisco serves is in the early stages of a fundamental transformation that will devalue high-margin hardware, but I believe Cisco is already taking some reasonable steps to offset the risk.

Follow this link for more:
Can Cisco Pull Its Weight As A Barbell-Type Pick?

Seeking Alpha: Brocade On Better Footing, But It Won't Be Getting Easier

A year ago I advised patience with Brocade (NASDAQ:BRCD), as I thought the Street was too bearish on the company's prospects for retaining high-margin SAN business and building up its IP networking operations. While the storage challenges are not going away, the company should be in position to benefit from the growing rift between EMC (NYSE:EMC) and Cisco (NASDAQ:CSCO) and growing deployments of all-flash arrays. On the networking side, the VDX line is doing well and the company is assembling a cogent collection of SDN/NFV pieces, but it remains to be seen if the company can grow share and monetize that opportunity.

With the shares up more than 40% over the past year, I'm calling it a day on the Brocade undervaluation call. Management has done a very commendable job with execution (particularly on margins), but now the questions are shifting more towards the company's real growth prospects and I'm not quite as confident about those as I was on the undervaluation a year ago. There are indeed opportunities for Brocade to outperform, but I need a better mix of growth and value here before getting more bullish.

Read the full article here:
Brocade On Better Footing, But It Won't Be Getting Easier

Seeking Alpha: NetApp's Best Hope Is Probably Its Wallet

Given the operating struggles that are increasingly evident with each quarter, NetApp (NASDAQ:NTAP) may be best served by thinking along the lines of, "if you can't beat 'em, buy 'em". As is, I think NetApp has painted itself into a corner such that if it doesn't do something significant via M&A, the company is probably done as a real force in storage. Nimble (NYSE:NMBL) and Tintri are chewing on the company, and while Nutanix seems to talk and think more about EMC (NYSE:EMC) and VMware (NYSE:VMW), I can't see how the company's position in hybrid cloud today is encouraging for NetApp.

NetApp longs are not going to like this (and yes, I own EMC shares), but I don't see a very bright future for ONTAP, and I think the company's relative strength in the mid-range market is going to mean less and less with what's happening in hyper-converged infrastructure and hybrid clouds. While NetApp may have more value than the market credits today on the basis of a legacy business (external arrays aren't going to vanish tomorrow), the product revenue growth that the Street generally requires as a prerequisite for bullishness is going to be tough to create. With that, NetApp's best asset may be its nearly $4 billion in net cash and the opportunity to acquire a business like Nimble, Tintri, Tegile, or Nutanix and reinvigorate its positioning relative to where storage seems to be heading.

Read more here:
NetApp's Best Hope Is Probably Its Wallet

Seeking Alpha: EMC Not Exactly Making Its Case

Several large tech players, including Microsoft (NASDAQ:MSFT), Cisco (NASDAQ:CSCO), and Hewlett-Packard (NYSE:HPQ), have gone through multi-year stretches where their shares underperformed due to persistent concerns about their long-term competitiveness and growth potential. To varying extents these companies have changed the tone around their businesses, but it doesn't automatically follow that EMC (NYSE:EMC) will be able to go that same route. While EMC has managed to do a credible job of keeping itself relevant within its core storage market, there are persistent concerns about whether that market is truly valuable anyway and whether EMC can reposition itself for future growth.

I'm increasingly on the "cautious yes" side of that question. EMC has historically done a good job of buying the pieces it needs to remain at the top of the market, as well as identifying assets like VMware (NYSE:VMW) and RSA that can grow the business. Expectations are not particularly demanding today, but then EMC's performance doesn't call for aggressive projections and there are increasing risks (in my view, at least) that the company will respond to the pressure its under with a larger acquisition.

Read the full article here:
EMC Not Exactly Making Its Case

Seeking Alpha: Patience With EMC Has Yet To Pay Off

Buying large-cap tech can be tricky, as investors are unforgiving in their demands for growth. I have long liked EMC (NYSE:EMC) and regarded it as a long-term play on the evolving enterprise IT world, but owning these shares has offered no particular boost to my portfolio returns.

I continue to believe that EMC is undervalued and that growth-oriented businesses like NSX, Pivotal, XtremeIO, and Airwatch offer good potential. I also think that ownership/control of VMware (NYSE:VMW) is an asset and not a drawback as some believe. That said, there are real questions as to whether the changes in traditional storage markets will take away growth faster than these new ventures can add it back. An acquisition offer from another enterprise player like Hewlett-Packard (NYSE:HPQ), Cisco (NASDAQ:CSCO), or Oracle (NYSE:ORCL) would be an easy exit opportunity, but I suspect that EMC's decision to stick to its guns regarding its outlook/prospects will make a deal too hard to reach and force investors to continue to exercise patience to see this stock deliver adequate returns.

Read more here:
Patience With EMC Has Yet To Pay Off

The Motley Fool: EMC Corporation Is Gaining Share, But Facing a Fight to Keep Its Business Model Intact

EMC (NYSE: EMC  )  has finally gotten some positive attention and investor interest, but only because of the possibility that an activist investor will push management in a strategic direction it has already said it does not wish to go. Second-quarter results showed sequential improvement and share gains in the core storage market, but EMC still has work left to do in convincing investors that it has the right solutions for the next wave in the market, and that VMware (NYSE: VMW  ) is a critical part of the model.

Follow this link to the full article:
EMC Corporation Is Gaining Share, But Facing a Fight to Keep Its Business Model Intact

Seeking Alpha: The Storage Shakeout Is Tossing Brocade Around Too

Brocade's (BRCD) strong recovery rally ended on April Fool's Day, in large part due to growing pessimism about enterprise storage demand and the resulting demand for Brocade's fibre channel storage area network (or SAN) switches. Add to that some ongoing pessimism regarding the company's ability to compete in IP networking and whether there's much incremental leverage to squeeze from the business and Brocade is back to a "show me" story.

I continue to believe that Brocade shares are undervalued, but the market is notoriously unkind to low-growth free cash flow rich tech stories and the storage market is going to need a few more quarters to sort itself out. At a minimum, I think that means that readers considering Brocade for its potential value will need to be patient as it works through these challenges.

Click the link to continue:
The Storage Shakeout Is Tossing Brocade Around Too

Seeking Alpha: NetApp Grinding Out Cash-Rich, Growth-Poor Quarters

Conditions in the storage market are pretty lousy. Smaller, newer companies like Nimble Storage (NMBL), Pure Storage, and Tintri are doing alright, but the legacy players like EMC (EMC), IBM (IBM), and NetApp (NTAP) are having a rough go of it as enterprise customers run older systems for longer and continue to approach storage spending cautiously as they evaluate cloud and flash alternatives.

I don't believe that NetApp is never going to grow again, but I do think the company is paying a price for years of prioritizing margins and cash flow and being reticent to spend its cash on M&A to support its growth prospects. I believe EMC (which I own) has done a better job of diversifying its business and positioning itself for the changes underway in the storage market, but NetApp shares look over-punished and undervalued provided that emerging threats like cloud and software-defined storage do not completely gut the market.

Read more here:
NetApp Grinding Out Cash-Rich, Growth-Poor Quarters

Seeking Alpha: Brocade's SAN Business Showing Some Resilience

When I wrote up Brocade (BRCD) as a Top Pick in mid-August, a lot of my thesis was predicated on the Street underestimating the company's ability to cut costs and overestimating the threats to the company's SAN business. So far, that thesis is working as the shares are up more than 20% since that pick (versus approximately 15% and 8% moves for the S&P 500 and Nasdaq). I do believe that there are very relevant long-term concerns about Brocade's core SAN switch business, but even modest growth expectations support a fair value closer to $11 today.

Please continue here:
Brocade's SAN Business Showing Some Resilience

The Motley Fool: EMC Corporation's Transition Issues Have It Stuck in a Value Trap

These are not particularly enjoyable days to be an EMC (NYSE: EMC  ) shareholder. While the company's market share in its bread-and-butter storage offerings is quite strong, and EMC has launched numerous products/platforms with good long-term growth potential, the storage market itself has seen a lot of change and turbulence. With that, the Street seems virtually indifferent to the company's good margins and strong cash flows and is focused instead on short-term revenue growth concerns. EMC looks exceedingly cheap on a DCF basis, but readers thinking of buying today need to be prepared to ride out the transition issues of 2014.

Click this link for the full article:
EMC Corporation's Transition Issues Have It Stuck in a Value Trap

Investopedia: Is Improving IT Demand Enough To Maintain Teradata's Rebound?

The rise and fall of Teradata (NYSE:TDC) over the past two years is a good lesson in the pitfalls of theme investing in tech. Teradata enjoyed a great run on the back of “Big Data” hype and shares of this data analytics company definitely overshot fair value. Once IT budgets came under pressure, though, Teradata's reported results showed just how sensitive the company remains to on-the-ground IT demand. While the shares have bounced off their 52-week lows and the company is a credible player in an important market (the collection and analysis of enterprise data), it's hard to call this stock a bargain today.

Please follow the link to continue:
http://www.investopedia.com/stock-analysis/082613/improving-it-demand-enough-maintain-teradatas-rebound-tdc-ibm-orcl-emc.aspx

Investopedia: NetApp Underwhelms, But Still Looks Undervalued

There is a risk that investors and analysts are going to start viewing NetApp (Nasdaq:NTAP) less as an undervalued tech stock in an attractive market and more of a “cheap for a reason” underperformer that has gone about as far as it can against its major rival EMC (NYSE:EMC). I don't really share that view per se, but it's harder to argue for the bull case on NetApp when the company continues to leave the Street wanting more.

Read the full article here:
http://www.investopedia.com/stock-analysis/081513/netapp-underwhelms-still-looks-undervalued-ntap-emc-ibm-hpq.aspx

Seeking Alpha: A Beat's A Beat, But Brocade Still Needs More Growth

Tuesday night had to be satisfying for Brocade (BRCD) shareholders. The stock has been strong over the past three months (up almost 40%) despite a twitchy Nasdaq and at least two downgrades to "Underperform," and Brocade topped that off with a beat-and-raise fiscal third quarter.

Brocade is already making clear progress on its efforts to restructure and reduce operating costs. What's less clear is the growth trajectory of its storage and IP networking businesses. Better than expected performance in storage is encouraging, and predictions of the rapid demise of this business are likely premature, but the IP networking business still has a ways to go. All of that said, Brocade shares still appear quite cheap on a discounted cash flow basis - if the company can preserve or rejuvenate the storage business and find a better match between its IP networking technology and its targeted customer verticals, these shares could still do quite well from here.

Please follow the link to continue:
A Beat's A Beat, But Brocade Still Needs More Growth

Investopedia: Fusion-io Tries To Hit Reset, But The Street Will Carry A Grudge

By no means is it unheard of for tech companies, including storage companies, to stumble in their early years. With Fusion-io's (NYSE:FIO) fiscal fourth quarter and guidance, management can certainly check that box. The trouble now is the question of how to weigh out the balance of the company's interesting enterprise flash storage technology (and the growing marketing opportunity) with the likelihood that the company can and will execute on that opportunity.

Fusion-io deserves the time it's going to spend in the doghouse. Earlier management was brash and bold, and the Street doesn't necessarily have a problem with that, but the failure to deliver is now an issue. I don't particularly like this company, but even I have to say that the valuation is now at a point where the stock is possibly interesting again if the company doesn't have to reset guidance to a lower level once again.

Please read the full piece here:
http://www.investopedia.com/stock-analysis/081213/fusionio-tries-hit-reset-street-will-carry-grudge-fio-emc-lsi-ibm.aspx

Seeking Alpha: Forget The Temporary Worries, Lenovo Built To Continue Winning

Every time a new consumer tech gadget comes out, it seems like investors forget a simple a rule - sooner or later, everything becomes a commodity and success comes down to who can design, build, and ship at the most appealing cost structures. That's something that Lenovo (LNVGY.PK) has quite a bit of experience with, as it has used internal execution and significant acquisitions to become the world's #1 PC vendor and the #3 handset company.

I don't see any reason to believe that Lenovo is done. The company has started to build its server business, and may ultimately strike a deal with IBM (IBM) that would vault it into the #3 slot almost overnight. Likewise, the company is looking to take its growing mobile device business into the U.S. in 2014, and Lenovo's past success in the PC business suggests that investors shouldn't ignore the potential there.

There are risks that the Chinese PC market leads to some noise in the shares over the next quarter or two, but waiting for that to settle down could mean missing a few points in the stock. With long-term appreciation potential of more than 30% to 60%, Lenovo looks like a good play on emerging markets consumer and business spending.

Please continue here:
Forget The Temporary Worries, Lenovo Built To Continue Winning

Investopedia: EMC May Be Stronger Than It Looks

So far, this is looking like a quarter where the IT hardware space is still in rough shape, but not quite as bad as feared. That's good news for EMC (NYSE: EMC), as storage equipment budgets generally follow the overall space. It also looks as though VMware (NYSE:VMW) may be recovering faster/better than expected, and it's worth noting that EMC delivered an in-line quarter even though the launches of the new VNX2 products have slipped into third quarter. All told, while this wasn't a quarter worthy of a victory dance, the idea that EMC's performance is improving seems realistic and the stock's valuation still looks attractive.

Please continue here:
http://www.investopedia.com/stock-analysis/072513/emc-may-be-stronger-it-looks-emc-ibm-ntap-amzn-vmw.aspx

Investopedia: Symantec Fixing What Was Never Too Badly Broken

If you're going to repair and turn around a business, it certainly helps to start with one that wasn't too badly broken to start off. While Symantec (Nasdaq: SYMC) had certainly seen revenue growth and operating leverage stagnate, the company was still generating strong cash flows and maintained solid (if not leading) market share in multiple markets. With the company's new plan targeting commonsense expense reductions and a greater focus on customer value, these shares could be meaningfully undervalued today.

Please follow the link for more:
http://www.investopedia.com/stock-analysis/062513/symantec-fixing-what-was-never-too-badly-broken-symc-intc-emc-ibm.aspx

Investopedia: EMC Opening Its Wallet And Bracing For The Next Evolution Of The Market

These are busy times for EMC (NYSE:EMC). It may not look like it, given the sleepy state of the IT hardware market, but like a duck moving across a pond there is a lot of activity going on below the surface. EMC is looking to position itself to not just withstand but prosper from changes in its core storage business, while also sharing more capital with its shareholders. Although big capital returns are often a sign of fading prospects in the tech space, I do believe EMC is undervalued on its long-term prospects.

Please read more here:
http://www.investopedia.com/stock-analysis/053013/emc-opening-its-wallet-and-bracing-next-evolution-market-emc-amzn-vmw-ntap.aspx