As EMC's slumping stock price today indicates, a lot of investors are also skeptical about the company's potential to grow into an 800-pound gorilla in this space, analysts say. EMC announced today that it expects to report better than expected second-quarter earnings -- but it saw its shares drop by 4.3 percent to $11.24 a share (see EMC Upbeat on Q2).
Legato, meanwhile, fared far better. That company saw its stock price soar nearly 9 percent today on the news, jumping to $9.91 at the close of the market.
Most observers seemed to agree that the deal is a good one for Legato, which has seen its storage software market share shrink as it has cowered in Veritas's growing shadow. The acquisition will not only give the company's shareholders about 50 times Legato's projected 2004 earnings, but will also ensure much broader sales channels for its products.
One of Legato's largest reseller partners, Cambridge Computer Services, says it's happy with the news. "This is a great opportunity for Legato to get much broader adoption of their products," says Jacob Farmer, CTO and founder of Cambridge Computer Services, a systems integrator that specializes in data storage and backup. "We've seen that growth in the adoption of their products directly translates into growth in our business."
"Longer term, I view EMC as wanting to expand beyond just storage management," says Lofgren. "They probably want to extend into other areas to be more of a data-center management company."
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