NEW YORK (TheStreet) -- EMC Corp. (EMC) shares are gaining 3.62% to $26.93 in early morning trading on Thursday as Dell, the personal computer maker, is in advanced talks to buy the data storage company in a deal valued at about $50 billion, the Wall Street Journal reports. CNBC confirmed the deal.
The deal announcement could be only a week away, and it could be one of the largest leveraged buyots on record.
Under the terms of the agreement, Dell would keep control of VMWare.
Sources told CNBC $40 billion in financing will be needed for deal.
TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio commented EMC saying: "We know now that Dell is buying EMC and it could be very additive because it will own the fast growing VMWare."
Dell is looking to pay all cash for EMC and is in the process of speaking with banks, sources told Reuters.
Since last year, the company has been undergoing pressure as activist investor Elliott Management Corp. said it should spin off majority-owned VMware (VMW), the Journal said.
Based in Hopkinton, MA, EMC develops, delivers, and supports information infrastructure and virtual infrastructure technologies, solutions, and services
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 36.9%. 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 14.85% 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