- Shares of EMC Corporation EMC rose nearly four percent Thursday morning.
- Various media reports such as The Wall Street Journal and CNBC reported that Dell and EMC are discussing a potential merger.
- Aaron Rakers of Stifel commented in a note that a combination between EMC and Dell "would leave many questions."
The Wall Street Journal reported on Wednesday that Dell and EMC are currently in merger discussions. CNBC reported on Thursday that Dell may be interested in acquiring the company for $27 (or more) per share as early as next week. Aaron Rakers of Stifel discussed the potential merger in a note on Thursday. The analyst pointed out that the validity of the headlines is "unknown" as EMC has been rumored to have taken part in prior merger discussions with Dell and Hewlett-Packard back in September 2014. Rakers added that his checks continue to indicate "challenging fundamentals" within EMC Information Infrastructure as the company. The company is also "very focused" on cost and portfolio realignment efforts and continues to see "significant" portfolio shifts (traditional VMAX and VNX) storage revenues declining at more than 10 percent year over year, while new solutions (such as the all-Flash XtremIO) solutions grow "exponentially." As such, the analyst noted that a combination between Dell and EMC would "leave many questions" concerning operating and go-to-market synergies, and the companies' view on an overall deep portfolio positioning/consolidation in a converging enterprise data center infrastructure landscape. Shares of EMC were maintained with a Buy rating and $33 price target.
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