OpCo Thinks That Everybody but Citrix Benefits from the Dell/EMC Deal

October 12, 2015 9:53 AM EDT
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Oppenheimer analyst, Ittai Kidron, thinks the Dell/EMC deal could have a far reaching impact on the storage and networking industries, affecting both large and small players. His thesis revolves around the following 4 points:

When it comes to storage, Cisco (NASDAQ: CSCO), a serial acquirer has pursued a partnership strategy but that may change. Cisco now needs to re-examine its position in storage and possibly look to build out a portfolio of products. In the case of Cisco, this means acquisitions and possibly several of them. While the acquisitions would likely be small, they would be expensive and could cause a negative reaction from the street initially but longer term it would increase growth.

In the short term, winners would be NetApp (NASDAQ: NTAP) and HP’s Enterprise (NYSE: HPQ) (NYSE: HPE) business as Dell and EMC begin to combine and streamline. However, longer term, both would likely need to take steps to beef up the breadth of their data center product offerings.

The impact on these larger vendors, makes emerging storage companies more valuable and improves their ability to hire top talent. This list includes but is not limited to: Nimble (NASDAQ: NMBL), Nutanix, Pure (NYSE: PSTG), SimpliVity, Tegile, and Tintri. They could not only become prime acquisition targets but also see a lift in business activity as companies reexamine their vendor lists.

Citrix (NASDAQ: CTXS) could end up being the big loser if Dell/EMC take a more hands off approach to VMware (NYSE: VMW). More flexibility could improve VMware’s competitive position against Citrix and could finally be the catalyst that causes Mark Templeton to sell.

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