Rival bid forced EMC to 'pay too much' for RSA - CEO
How do you define gouged?
After devouring more than 20 companies since 2003, storage company EMC has a half-billion dollar tummy-ache.
At a media briefing in Sydney, EMC CEO Joe Tucci admitted last week to overspending on the company's $2.1bn acquisition of RSA.
When pushed on the RSA buy, Tucci said, "Well I probably did (overspend), but what’s the definition of too much?”.
"It's market value at the time was around $1.6 billion and we paid $500 million more than that, but it was a very competitive bidding process which came down to us and one other party," said Tucci. The identity of the other party was not revealed.
Market analysts have gagged at the high price tag since the company's acquisition of RSA last June. Tucci asserts that the splurging for the software security company was worth it.
"Time will prove that RSA is a great asset and this was a great acquisition," said Tucci.
The overspending has not soured EMC's hunger for smaller companies. Tucci said EMC will be making more acquisitions throughout the year, although none on the scale of RSA. EMC has spent more than $6bn on acquisitions since 2003, buying companies such as Documentum ($1.7bn), VMWare ($635m) and Legato ($1.3bn). According to Tucci, the company plans on acquiring additional companies this year to beef-up its current line-up rather than charging into new technology areas, as it did with RSA.
Tucci also stuck close to EMC's January forecast for the 2007 fiscal year during the briefing. "Revenues will be north of $12.7 billion this year with the bottom line growing close to 20 percent," he said.
However, according to one source, some analysts predict the company will struggle to meet its internal forecast for the first quarter.
Tucci fancies that gobbling up companies have metamorphosed EMC from a wriggling storage maker caterpillar into a beautiful "information management company" butterfly.
"We spent 15 years building up EMC as a storage company, and now we're saying we need customers to think of us as much more," Tucci said.
Tucci played to his audience, singling-out Australia as one of EMC's strongest markets, saying EMC's growth in the country will out pace the company's worldwide business. ®