How Valuable Is VMware To EMC’s Business?

-8.60%
Downside
29.05
Market
26.55
Trefis
EMC: EMC logo
EMC
EMC

EMC (NYSE:EMC) has been the dominant player in the storage systems market in recent years. However, a slowdown in the hardware business over the years has led VMware (NYSE:VMW) to be the most valuable segment within EMC. According to our estimates, VMware makes up about 50% of our $27 price estimate for EMC’s stock, which is roughly in line with the current market price.

VMW_EMC1Explosive growth in the virtualization and cloud computing business over the last few years and VMware’s market leadership in the growing market domains has led VMware’s market valuation to increase from about $625 million back in 2004 (when it was acquired by EMC) to about $30 billion when the Dell-EMC merger was announced late last year.

VMW_EMC2

Relevant Articles
  1. Dell-EMC Deal Finally Closes: A Look At How The Merger Could Impact HPE & IBM
  2. EMC Earnings Takeaways: Flash Array, VMware, Services Continue Growth
  3. EMC Earnings Preview: Storage Hardware Sales To Remain Suppressed, Services To Drive Growth
  4. Why You Should Take A Closer Look At EMC’s EPS Growth
  5. How A Worldwide Decline In Storage Systems Sales Impacts EMC
  6. How Valuable Is EMC’s Information Storage Business?

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  Our Full Analysis For EMC.

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