FBR Says EMC and VMW Both May Benefit From Spinoff

FBR Capital analyst Daniel Ives reiterated his Outperform rating and raised the price target for EMC

to $35.00 (previously $33.00), saying the share repurchase plan leaves investors with something to "hang their hat on" in the near term. FBR further notes that "A potential spin-off of VMware from EMC will face difficulties in the board room and would be an elongated process, in our opinion, we believe it could enhance shareholder value for both companies and would make VMware a top acquisition candidate by a larger technology player." Potential plans to increase shareholder value might Include: VMware spin-off Increased dividend/more share repurchases Reducing EMC's 80% ownership stake In VMW to a lower threshold Overall, Ives states, "We believe value enhancement remains the focus as EMC goes through a transition to providing its federated solutions for next-generation datacenters, and on a sum-of-the-parts valuation basis, we estimate that the base-case and best-case scenarios for EMC's fair value are $37 per share and $40 per share, respectively."