NEW YORK (TheStreet) -- EMC (EMC) shares are rallying 3.37% to $28.80 in early morning trading on Monday after the announcement earlier today that computer maker Dell would buy the storage firm for about $67 billion.
TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio commented on the deal this morning saying: "This is a sign that the value stocks have really bottomed as EMC had stagnated for years and Michael Dell has been a fantastic bottom caller."
Under the largest deal in tech history, Dell will pay $33.15 per EMC share of cash and stock and EMC-owned VMware (VMW) will remain a public company, Reuters reports.
"The combination of Dell and EMC creates an enterprise solutions powerhouse," said Michael Dell, who will head the combined company as chief executive and chairman.
Dell's headquarters will continue to remain in Round Rock, TX, and the headquarter of the merged company will be in Hopkinton, MA. The deal is expected to be close next year.
Additionally, the agreement has a 'go-shop' provision which gives EMC the opportunity to seek other bids and if an agreement is made with a different company, EMC should pay a discounted breakup fee to Dell, Reuters said.
Separately, TheStreet Ratings team rates EMC CORP/MA as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate EMC CORP/MA (EMC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth significantly trails the industry average of 37.3%. Since the same quarter one year prior, revenues slightly increased by 3.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.37, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.89 is weak.
- Net operating cash flow has decreased to $1,033.00 million or 17.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, EMC has underperformed the S&P 500 Index, declining 5.70% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: EMC