EMC Swings Into Software Big Leagues

EMC Corp. (NYSE: EMC) took a giant step closer to achieving two of its professed software goals today, as it announced that it will acquire content management software vendor Documentum Inc. (see EMC Cops Documentum).

For starters, the planned $1.7 billion stock swap for Documentum fits well with EMCs overall bid to rapidly expand its software presence, as it attempts to mitigate the continuing commoditization of storage hardware. The acquisition, which will be EMC’s eleventh acquisition of a software company in about three years, should push the company’s software sales very close to its 30-percent-of-revenue target by the end of 2004, according to Mark Lewis, EMC’s executive VP of software operations.

Even without taking into account the possibility for both internal and external expansion of its software portfolio, Lewis says that after integrating Documentum and Legato Systems Inc. (Nasdaq: LGTO), which the company expects to have acquired by Monday, EMC’s software sales will account for just over 28 percent of total revenues.

“We are very close,” he says. “We still have our sights on 30 percent.”

Lewis adds that over the past 12 months, EMC, Legato, and Documentum brought in about $2.2 billion in combined software revenues. “If you go through the list of software companies with more than $2.2 billion in [annual] revenues, that puts us in a very small crowd,” he says. Once EMC completes the two acquisitions, Lewis says, it will be one of the 10 largest software companies in the world.