Hopkinton, Mass.-based EMC will use deals to diversify beyond the storage business that generates 75 percent of sales, Gelsinger said in an interview yesterday. Purchases will home EMC's focus on tools and services for so-called "big-data," reams of information from multiple sources, including the Web, e-mail and computer systems, he said
"We have to double down," Gelsinger said in an interview June 8. "We're not done with our acquisitions in this space—I expect we'll do more. The number one storage infrastructure application for us is big data."
EMC says it spent $3.2 billion last year on acquisitions including Isilon Systems Inc. and Greenplum Inc. to gain products that let its customers store and analyze a vast and rapid onslaught of data from business applications and the Web. EMC may spend about that much again in 2011 as it races Oracle Corp., International Business Machines Corp., Hewlett-Packard Co. and SAP AG to offer more robust data-analysis products.
"Big data is of course big business all of a sudden," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, California. "Everyone is after this market. It's a huge opportunity."
Gelsinger, who joined EMC almost two years ago from Intel Corp., where he was chief technology officer and headed the company's business computer chip division, has helped EMC take advantage of the latest products from Intel and positioned the company to complement its storage devices with applications that analyze data for stock trading and Web commerce.
'Hat in Ring'
Gelsinger said he is one of a handful of executives being considered to succeed Chief Executive Officer Joseph Tucci, who in June reiterated plans to step down after next year. "I've stated clearly, 'Hey, my hat's in the ring," said Gelsinger.Security will be another priority in acquisitions, Gelsinger said. Market researcher Gartner Inc. said this week that a security breach of EMC unit RSA's SecurID database in March may cost the banking industry as much as $100 million to distribute new network log-in devices to employees. RSA said June 7 it would replace customers SecurIDs. There are about 40 million in use.
EMC has the financial firepower to execute deals, Gelsinger said. It had $5.69 billion in cash at the end of the first quarter and generated $4.55 billion in cash from operations last year. First-quarter sales rose 18 percent to $4.61 billion.
Shares Outpace S&P
EMC's shares slipped 8¢ to $26.91 on the New York Stock Exchange yesterday. The stock had climbed 18 percent this year before today, compared with a 2.5 percent gain for the Standard & Poor's 500 Index and a decline of 1.1 percent for the S&P 500 Information Technology Index."Wall Street now credits us with the ability to monetize these acquisitions," Gelsinger said.
EMC is also using partnerships to bolster its product lineup. The company introduced computer systems on April 5 that include statistical analysis software from SAS Institute Inc., and said on May 9 that its products would work in conjunction with the open-source Hadoop software to help companies analyze large amounts of data.
Gelsinger is one of a group of high-profile executives who have joined EMC in recent years as the company seeks to reinvigorate itself. EMC shares and growth surged during the Internet expansion of the 1990s. Its stock and profit declined after the dot-com bust. The company purchased virtualization software company VMware Inc. for $635 million in 2004 and sold a stake in the company in an initial share sale in 2007. The market capitalization of VMware is now $39.7 billion.
Besides Gelsinger, EMC has also hired Jeremy Burton, who has worked at Oracle Corp. and Symantec Corp., as chief marketing officer, and Michael Capellas, who was CEO of Compaq, to head a joint venture with Cisco Systems Inc.
