on Tuesday moved to beef up its network management software offerings, buying privately held
for $260 million in cash.
The acquisition is expected to close in the first quarter of 2005, but won't have a material impact on EMC's bottom line during fiscal 2005.
The acquisition follows last week's
, but the deal had been in the works for some time and is not a direct response, said EMC Executive Vice President Howard Elias. Rather, it is a continuation of EMC's steady push into software and comprehensive management of data -- in industry parlance, "information life-cycle management."
Elias said that EMC will apply Smarts' networking management expertise to the management of storage networks. "In the future, perhaps storage and data networks can be managed as one," he said during an interview.
Smarts will post revenue of about $60 million, a growth rate of about 25%, in 2004, said analyst Steve Berg of Punk Ziegel. He said that according to market researchers the addressable market for network management was $1.8 billion in 2004 and should grow at compound rate of 10% for the next four years.
Berg, whose company does not have an investment banking relationship with EMC, said the price was reasonable, and speculated that other network management companies, such as
the much larger Mercury Interactive
, or any one of a number of smaller players could eventually be acquisition targets.
Elias said the Smarts sales and engineering teams will be integrated into EMC, but his company will maintain "discrete units" to handle Smarts' sales and engineering issues.
In recent years, EMC has moved to complement its core business by buying companies such as Legato, which added backup capabilities, and Documentum, which added content management.
In recent trading, shares of EMC were up 24 cents, or 1.7%, to $14.27.