EMC strikes blow to competitors, buying Isilon

EMC for $2.25 billion purchased Isilon Systems company that strengthens positions of the company in the market of the systems of external storage of $19 billion concerning closest competitors - NetApp and IBM.

Isilon which EMC agreed to purchase for $33.85 for an action develops and implements so-called cluster systems of network data storage: systems which can be added easily to each other for increase in space of storage under data, video and digital images. The price for an action offered EMC appeared for 29%, than on a status of closing of a trading in shares of the Seattle company on November 12.

Purchasing Isilon, EMC intends to receive from this direction to $1 billion annually already to the second half of 2012 that it three times exceeds revenue which it gives now. The transaction will also allow EMC to resist to technology new products of competitors, Sid Parakh, the analyst of McAdams Wright Ragen said.

Isilon has a good product portfolio, the analyst from Seattle added. "Whereas EMC has only some developments in this segment and is only going to start a row new, NetApp and Isilon left far forward", - he added. According to EMC, the transaction will not give a direct material effect this year, however, already in the following will bear fruit. As expected, it will be closed until the end of this year.

Yesterday in connection with the message about purchase of share of Isilon grew in price for $7.48 or 28% up to $33.77 as of 16-00 New York times at the Nasdaq exchange. The stocks EMC fell to 27 cents up to $21.45 at the New York Stock Exchange. For the current year the stocks Isilon grew in price in total four times because of permanent speculation on purchase of the company. The company even employed the special person for search of potential buyers, the adviser according to the transaction acted as Morgan Stanley.

Business in the market of storage systems becomes lately unusual attractive to purchases as large vendors actively complete the product lines. So, in September purchased HP the producer of storage systems 3Par after long rivalry for this purpose with Dell. Vendors use such purchases for gain of the offer in the market of DPCs, having an opportunity to sell server solutions, software and storage systems from one producer.

EMC feels threat from NetApp which aimed at the market of cluster storage long ago, Daniel Ives, the analyst of FBR Capital Markets noted. It gave an excellent assessment to the stocks EMC in the report for the clients. EMC is going to combine products from Isilon with the line of Atmos that will allow to support applications which generate big arrays of information, including researches DNA, stream video and tracking of earthquakes.

And if Isilon first in the market of cluster systems of storage, then EMC in general is in the lead in a segment of the systems of external data storage. IBM and NetApp, according to IDC, occupy, respectively, the second and third position. Isilon in which about 500 employees work, agreed not to consider other offers on purchase though under the law can still make it. If the company cancels to a socklet, it should pay EMC of costs in the amount of $100 million.