EMC "pleads guilty" to overpayment in RSA acquisition

More acquisitions planned

EMC CEO Joe Tucci today said he pleads guilty to "some overpayment" in the company's $US2.1 billion acquisition of RSA Security last year.

In a frank and open dialogue with media in Sydney today, Tucci said he "probably" paid too much for RSA but as far as acquisitions go there is always some sort of premium paid.

"It's [RSA Security] market value at the time was around $1.6 billion and we paid $500 million more than that but it was a very competitive bidding process which came down to us and one other party," he said while not disclosing the other party.

Responding to analysts claims the acquisition was over-priced, Tucci said he is confident these same market analysts will change their tune in the future.

"Time will prove that RSA is a great asset and this was a great acquisition," he added.

"We have spent $7 billion in recent years acquiring technology; we will grow our services organization through partnerships."

Tucci nominated Accenture and EDS as examples of partnering opportunities to build the company's services capability.

Tucci said the RSA acquisition is a good fit describing EMC as an infrastructure company.

"We operate the company in two parts; there is virtualization infrastructure and information infrastructure," he said adding that there will be plenty more acquisitions throughout the year but they will be much smaller, certainly not in the league of RSA or Documentum.

"Revenues will be north of $12.7 billion this year with the bottom line growing close to 20 percent."

The Australian market, he said, is growing faster than the rest of the globe and local revenues are "meaningful."

While unwilling to breakdown local revenue figures, Tucci said EMC Australia will have 1,000 staff by the end of the year.

With growth here expected to remain strong, Tucci said going forward he will be visiting Australia every 12 to 18 months.

One area undergoing significant change is the data centre with Tucci claiming it will change dramatically over the next two years as a result of service oriented architecture (SOA) and virtualization.

"Infrastructure will be more dynamic and resources better utilized; in the next five years the majority of infrastructure will be virtualized, you can't stop gravity and that's the way gravity is going," he said.

Tucci said the gem in EMC's crown is VMWare as the spotlight is on virtualization.

EMC is planning to offer 10 percent of VMWare in an initial public offering mid-year.

"I always knew I was going to do this [the IPO] but everything is about timing and the market is really heating up right now," he said adding that when EMC bought VMWare in 2004 it had 300 staff.

Today, VMWare has 3,000 staff and the company has more than 20,000 customers with more than 10 per cent of new x86 workloads running on VMWare software.

Revenue from the EMC subsidiary was up 83 percent in 2006, totalling $709 million.

Tucci said this will reach well over a $1billion this year.

During his visit to Australia this week, Tucci will meet with both customers and staff.

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