EMC (NYSE:EMC) has acquired Aveksa Inc., a privately held company, that mainly provides identification verification services. Aveksa’s offerings help companies verify identity of users accessing their networks and web-based software applications. The acquisition of Aveksa will strengthen EMC’s security portfolio as it will be integrated with its RSA division. EMC will combine its own offerings with Aveksa’s products to offer a single Web-based cloud platform to prevent unauthorized access. While terms of the deal were not disclosed, the acquisition is not expected to have a material impact for the full 2013 fiscal year.  We, therefore, do not see a significant impact on our price estimate.
RSA Division And The Aveksa Acquisition
RSA, the security division of EMC, provides security, risk and compliance management solutions for businesses. These include managing mobile access, compliance and securing cloud environments. It mainly deals in identity assurance, encryption & key management, network monitoring, and fraud protection. While RSA is one of the biggest players in the security management space, its products are largely focused on access management, authentication and authorization services. The acquisition will strengthen RSA’s presence in continuously growing identity management market.
Most of the current software packages lack the intelligence and business context to ensure that the right users get access to appropriate company resources, making the process more dependent on IT professionals. Aveksa’s offerings are somewhat different in the sense that it takes more of a line of business approach rather than an IT one. Further, the company has a software-as-a-service (SaaS) identity and access management solution that provides visibility and control of both on-premise and cloud applications in a single cloud-based solution. As the SaaS model continues to see rapid adoption due to lower costs, this is expected to boost Aveksa’s growth going forward. Further, EMC already has a large customer base and could leverage it to market Aveksa’s products.
RSA is a relatively small division and accounts for nearly 4% in annual revenues for EMC. We estimate that the division is worth sub 5% of our $40 Trefis price estimate for EMC. We recently discussed our rationale for a significant upside to EMC in a note EMC’s Capital Return Plans Are Another Sign That Its Shares Are Undervalued.Notes: