DownSouth...Cheerleading is a bit strong a term, doncha think...
I'll expand a bit on my points...
(1) This is not a "big" merger (that is hard to dispute) due to (1) Value of deal (No cash going out either) (2) Proximity of facilities (3) Tangent products (This is not a technology company buying another technology company in much different markets, straying far from its core competency)...in these ways, I see a good analogy to what Cisco (often) does...also, you are aware that Cisco often buys much smaller companies for a particular product or technology (and gets stuck with some baggage, other products, strategy which are not important, don't play into Cisco long-term strategy)...I do admit it is not a perfect analogy, but not a bad one either....
(2) Dell heavily uses DGN technology (reseller, Clarion); Dell has grown quite nicely storage revenues in the past year...so I assume that DGN's technology is not so old, obsolete as you are portraying...
(3) EMC, to get down into this space, would have to spend $$ on RD to develop competitive products (anyway)...if they had already identified this space (as one they want to enter, is growing)..then, obviously, it is a make/buy decision....obviously DGN has something EMC has found cheaper to buy (than build)...At the least, it seems hard to dispute that EMC should be able to do a better job marketing/distributing DGN's current technology BETTER than DG ever could (due to EMC's dominant relationships)..squeezing a lot more juice out
So, you still think EMC's stock should go down 2-3 Billion in market cap due to this deal??
All I can say is ????
Why should the stock rally? Around 50% (maybe more) EPS growth for the next 2-3 years...and little or no Y2K impact...clear dominant technological leader in its space...overall market growing 30%....
Dow, Naz well off highs.....Current market (bond, stock) overreaction to latest economic data (worse-case scenarios heavily priced in)..."Hampton's effect" already discounted in market...
Next week CPI data....or getting the Fed meeting over with could be just the impetus for a nice rally, especially for big-caps..
If I'm right (and you're wrong), does that (still) make me a cheerleader? |
