According to a news release , and the WSJ, this HP news isn't what it appears to be on the surface. Sales of EMC products to HP customers are made by a joint HP and EMC team, so that while HP makes up 20% of sales, it contributes only single digit to EMC's earnings. Under present agreements EMC can't sell directly to HP customers. If HP breaks the deal, then EMC could sell directly to HP customers at better prices than the old deal. Hitachi is a minimal force in the storage systems business (world wide share under 2% and falling) so I can't see any big interest by US companies in using Hitachi. The fact that Hitachi is losing market share to IBM and EMC might be a sign that it can't stand on it's own. HP is also in a weakened position, so maybe the HP-Hitachi deal is like 2 drunks trying to hold each other up. Furthermore, EMC says it has anticipated HP action, and has hired lots of extra salespersons in the last year. EMC has stated that they regard this as earnings neutral, and my take on it is that it may be earings positive in the long run because it increases the sales possibilities.
Technically, EMC held above it's recent lows, and may be starting a double bottom "W" shaped chart pattern. Even though I think it will take time for the big money to stop chasing the cylicals, and thus there is a good chance EMC will be dead money for a while, I bought more today. |
