Fallen Generals

Cramer ponders the latest EMC acquisition.
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EMC

(EMC)

to buy

Data Gen

(DGN)

!

"Who's that bad for?" I yelled out the moment I saw the news on the tape. "

IBM

(IBM) - Get Report

?

Hewlett-Packard

(HP) - Get Report

?"

"Nah,"

Matt Jacobs

, our newest edition to the research department, piped up. "It's bad for EMC."

Yeah, Data General, once our largest position, simply couldn't go it alone anymore. But that doesn't mean that highflying EMC will mix with low-growth Data Gen.

Data Gen has some dynamite tech, always had. But I doubt it will sit well with those who love EMC for its world-beater growth. Nobody -- and I mean

nobody

-- was expecting this one. This is so out of the blue that even the great spinmeisters at EMC might have trouble explaining it. Wow, what a smack to the head!

Data General has spent the better part of this decade turning from proprietary systems to open systems. That was a difficult transition because proprietary systems carry high margins while open ones carry low margins. But even after the company completed the transition, it couldn't grow the business. It just never got critical mass. Oddly, its customers tend to be EMC's biggest competitors in storage, so it will be very hard to figure out what business gets kept and what business is lost. That's dicey.

When

Jeff Berkowitz

and I visited the company a few years ago, we saw plenty of products that made a huge amount of sense and could have taken over the world.

But Data Gen couldn't do it alone. Now it is gone. And it will be left to EMC why this deal helps the company.

Random musings:

Futures look up. I guess all of that worry from last Friday has vanished. Wow! Just kidding.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Hewlett-Packard. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.