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.

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The Dell And Market Pessimism For EMC Is Too Much

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.

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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.

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EMC Not Exactly Making Its Case

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.

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NetApp Grinding Out Cash-Rich, Growth-Poor Quarters

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.

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EMC Corporation's Transition Issues Have It Stuck in a Value Trap

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.

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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.

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A Beat's A Beat, But Brocade Still Needs More Growth

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.

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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.

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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.

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

Investopedia: NetApp Is Probably Cheap, But The Headwinds Aren't Going Away

Tech is in the dumps. That's not really new or controversial, as even Cisco's (Nasdaq:CSCO) report was not all that strong in absolute terms. To that end, it's not entirely surprising that NetApp (Nasdaq:NTAP) reported results that were a bit weak and guidance that wasn't terribly impressive either. I don't believe that NetApp is closing the gap with EMC (NYSE:EMC), nor will in the foreseeable future, but I believe there's plenty of money to be made as the #2 storage company, and I believe these shares continue to look meaningfully undervalued.

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Investopedia: Cisco Comes Through, But Times Are Still Tough

With so many negative earnings reports for the first quarter, expectations for Cisco's (Nasdaq:CSCO) quarter were pretty modest. As a good company should, Cisco came through with a solid quarter and signs of share gain in multiple markets. That said, while I do believe Cisco is still undervalued, investors might want to exercise some caution before piling back into tech stocks.

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http://www.investopedia.com/stock-analysis/051613/cisco-comes-through-times-are-still-tough-csco-jnpr-arun-ntap.aspx

Investopedia: NetApp Seems Stupid-Cheap

a stock seems too cheap, there's really only two things to do (and they're not mutually exclusive) - run the numbers backwards and forwards, and buy it. While the IT hardware market in general, and the network storage market in particular, has slowed in recent quarters, NetApp (Nasdaq:NTAP) looks too cheap, unless analysts are completely wrong in their basic assumptions. Although I don't think NetApp is going to seriously threaten EMC (NYSE:EMC) for the storage throne, fading efforts at Dell (Nasdaq:DELL), Hewlett-Packard (NYSE:HPQ) and maybe IBM (NYSE:IBM), leave plenty of share to grab above and beyond the underlying market growth.

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Investopedia: Dell Proves To Be A Laggard In A Weak Market

For whatever optimism Cisco (Nasdaq:CSCO) and NetApp (Nasdaq:NTAP) generated with respectable quarters, Dell (Nasdaq:DELL) rained on the parade with another weak result. Not only did Dell miss again, but the company seems to be badly lacking momentum in any of the sort of markets that would excite investors. While there is (and has long been) underlying value in this business, it's anybody's guess as to when the bleeding is going to stop.

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http://www.investopedia.com/stock-analysis/2012/Dell-Proves-To-Be-A-Laggard-In-A-Weak-Market-DELL-IBM-HPQ-AAPL1119.aspx

Investopedia: NetApp Handling This Rough Patch Relatively Well

It's starting to look as though those tech companies reporting late in the cycle have better news to give to the Street, as Cisco's (Nasdaq:CSCO) earnings report was decent and now so too was NetApp's(Nasdaq:NTAP). Although it's an open question as to whether much share is shifting between EMC (NYSE:EMC) and NetApp, both companies seem to be putting lesser competitors further and further behind. While there's definitely a risk that the near-term IT spending environment could worsen, NetApp still looks attractively-priced as a growth play on enterprise storage.

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http://www.investopedia.com/stock-analysis/2012/NetApp-Handling-This-Rough-Patch-Relatively-Well-NTAP-EMC-IBM-CSCO1116.aspx

Investopedia: Cisco Making The Best Of A Tough Environment

With a host of tech companies taking their licks through earnings season (or shortly thereafter), including companies like F5 (Nasdaq:FFIV), Riverbed (Nasdaq:RVBD) and Juniper (Nasdaq:JNPR), investors were nervous going into Cisco's (Nasdaq:CSCO) earnings report. While Cisco's numbers don't reflect all that much strength in the tech markets as a whole, it was a solid result in a tough time and the guidance for the next quarter wasn't bad either. Cisco continues to look meaningfully undervalued, but this stock is likely going to need some time to work out.

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http://www.investopedia.com/stock-analysis/2012/Cisco-Making-The-Best-Of-A-Tough-Environment-CSCO-FFIV-JNPR-RVBD1115.aspx

Investopedia: Not Even EMC Is Immune To Tech Headwinds

Data storage had been one of the strongest and most predictable segments of tech, but with EMC's (NYSE:EMC) earnings in hand, it's pretty clear that even this market has stalled in the face of more cautious IT spending. On a positive note, EMC continues to gain share in the market and refresh its offerings with new releases. I believe EMC remains one of the best-positioned tech companies today and a good stock to accumulate.

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http://www.investopedia.com/stock-analysis/2012/Not-Even-EMC-Is-Immune-To-Tech-Headwinds-EMC-IBM-NTAP-VMW1026.aspx

Investopedia: NetApp And The Difference Between Value And Cheapness

Tech is rolling through another summer lull, and there's that familiar worry about whether the revenue and profit growth will come back when the leaves start to turn. In the case of NetApp (Nasdaq:NTAP), there remains a two-fold worry - not only over the state of enterprise and government IT storage spending, but also the company's competitive positioning. While NetApp does look meaningfully underpriced by multiple measures, how much value is really in the shares?

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Investopedia: Is it Demand Or Competition Troubling NetApp?

Those tech companies that reported their earnings as part of the regular cycle all seemed to be more or less in good shape - numbers came in broadly in-line and guidance was relatively positive. Since then, though, numbers and sentiment have gotten a little wobbly, and maybe none more so than NetApp (Nasdaq:NTAP). Although these shares still seem to have meaningful value, investors have to ask whether the company's weak guidance is truly a byproduct of a weaker market, or whether competition has ramped up and management is unwilling (or unable) to acknowledge it.

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http://stocks.investopedia.com/stock-analysis/2012/Is-It-Demand-Or-Competition-Troubling-NetApp-NTAP-EMC-IBM-DELL0525.aspx

Investopedia: EMC And The Difference Between Slow And Stop

Worries about hardware demand continue to move stocks in the tech sector. To a large extent, the Street seems to have moderated its expectations, but EMC's (NYSE:EMC) supposed sluggish first quarter and conservative guidance seem to have some analysts concerned. Given the company's strong share across the board, EMC still looks like a great play on the hot Big Data theme.

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http://stocks.investopedia.com/stock-analysis/2012/EMC-And-The-Difference-Between-Slow-And-Stop-EMC-IBM-ORCL-FIO0423.aspx