EMC's merger talks with HP broke down, but the Wall Street Journal also reports it held discussion with Dell. One analyst says a merger is unlikely. Fred Katayama reports.
It would've been a huge marriage. Talks of a merger of equals between computer storage company EMC and HP went on for a year but broke off a few weeks ago. But the Wall Street Journal also reports that EMC had talks with Dell. Rather than an outright takeover, it said Dell could seek to buy assets, including EMC's core storage business. Pushing EMC to consider a sale and other options are two developments. One: EMC's CEO, Joe Tucci, plans to retire next. year. Two: Activist hedge fund Elliott Management has been pressuring EMC to spin off its stake in software maker VMware. VMware sells virtualization software that allows companies to cut costs by using fewer servers. While storage makes up the majority of EMC's revenue, the majority of its $60 billion valuation comes from its 80 percent stake in VMware acquired 10 years ago. The Journal says EMC doesn't plan to sell or spin off that stake. Longbow Research analyst Joe Wittine said, "We expect both a theoretical merger or a theoretical WMware sale would find stiff investor opposition and hence are both unlikely." Elliot Management is reportedly open to other options. EMC shares rose in early trading. Pressure from Elliott has helped boost its stock 17 percent this year, but it has vastly underperformed the S&P 500 over three years.