EMC's Eye on RSA Security

But EMC has never ruled out an acquisition the size of RSA, said a company spokesman.

Once a pure-play provider of storage hardware, EMC has used acquisitions to transform itself into a hybrid provider of hardware and software, which now account for more than a third of total revenue.

Wall Street hasn't always been supportive of Tucci's strategy. The $1.7 billion for Documentum, which provides software used to manage content, was criticized as being too far afield. But the purchase of VMware, acquired in early 2004 for $625 million, has been called a "home run" and will likely post $600 million in revenue this year.

There is also some feeling on Wall Street that a major acquisition would not be the best use of the company's $7 billion horde of cash. Sushil Wagle, an analyst with Seligman Technology, which holds shares, said in a recent interview that one of the factors holding down the company's stock is fear that it will spend too much on acquisitions. A better use of cash, he said, would be an accelerated buyback of shares.

Punk Ziegel's Berg said a lot of unknowns make it difficult to judge whether an EMC/RSA deal makes sense. Even if RSA gets an offer, there is no assurance that a deal will be reached. Also, it's possible the security company is saying there is another suitor solely to bid the price up. The final price tag for the potential deal is also important to consider. Berg does not own shares and Punk Ziegel doesn't do investment banking.

Following RSA's own admission of talks, its stock was recently nearing a suggested price tag of one analyst.

"We think a $24 price per share would be a very good buyout price," said Horacio Zambrano, an analyst with Wedbush Morgan Securities, who has a buy rating on the stock. "We think the valuation is pretty reasonable." Wedbush seeks to do investment banking with the companies it covers.