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   (FROM THE WALL STREET JOURNAL 10/10/15) 
   By Don Clark and Joann S. Lublin 

A potential buyout of EMC Corp. by Dell Inc. could solve a long-standing problem for the data-storage giant: finding a successor to longtime Chief Executive Joe Tucci.

Mr. Tucci, 68 years old, has flirted with giving up the CEO spot for several years and previously said he and fellow directors might settle the succession question by February 2015.

But the industry veteran stayed at the helm, though some analysts and an activist investor questioned EMC's growth prospects and Mr. Tucci's strategy.

Now his Hopkinton, Mass., employer is in talks to be acquired by Dell and private-equity firm Silver Lake for a price in the low-$30s a share, which could equate to a total price tag of more than $60 billion, according to people familiar with the matter. A deal could be reached as early as next week, they said.

That raises the prospect that Mr. Tucci's responsibilities will wind up being taken over by Michael Dell, founder and chief executive of the computer maker.

If so, the deal would cap the career of a widely respected, blunt businessman who built a powerhouse selling equipment that companies use to store critical business information.

"EMC has served as the benchmark for measuring storage companies for a couple of decades," said Scott Dietzen, chief executive of Pure Storage Inc., an EMC rival that went public Wednesday.

Mr. Tucci declined to comment through an EMC spokesman. A spokesman for Dell also declined to comment.

The search for Mr. Tucci's successor has continued for some time. Mr. Tucci said in July that EMC's board was "deeply engaged" in settling the issue, though no details have been disclosed.

The most likely internal candidate was considered by Wall Street analysts to be David Goulden, who is Mr. Tucci's top lieutenant and CEO of EMC's information-infrastructure business.

EMC pursued two outside candidates for the top job, but didn't get very far because the company's core storage business has been shrinking, one person familiar with the situation said.

A buyout by Dell would relieve EMC's board of the need to find a CEO. But Mr. Dell, 50, would seem to have the right qualifications to carry its business forward, having long led a larger technology company that sells to many of the same corporate customers.

Combining EMC's storage and software businesses would make Dell the No. 3 player in the enterprise technology industry by revenue, behind Hewlett-Packard Co. and International Business Machines Corp., based on Dell's last reported figure in 2013 of $56.9 billion. EMC reported $24.4 billion in revenue last year, suggesting a total for the combined companies topping $80 billion.

The accomplishments of Mr. Tucci, who has been CEO since 2001, include one of the most lucrative acquisitions in Silicon Valley history. EMC in 2004 paid $625 million for VMware Inc., the pioneer of virtualization software used to streamline operations in many corporate data centers. VMware later went public, leaving EMC with a roughly 80% stake.

Although VMware's revenue is about a third of EMC's data-storage business, the majority stake in VMware accounts for roughly half of EMC's $52 billion market value, FBR Capital Markets estimates.

But Wall Street's greater enthusiasm for VMware's business than EMC's turned into one of the biggest pressure points on the company. Activist hedge fund Elliott Management Corp. last year took a roughly 2% stake in the company and urged it to spin off VMware.

Mr. Tucci has said it made more sense to keep the software company as a linchpin of what he calls EMC's federation strategy. Other elements include the wholly owned security software company RSA and a majority stake in Pivotal Software Inc., which specializes in corporate data analysis and cloud computing.

EMC gets much of its revenue from large equipment that stores data on disk drives, a business facing pressure from alternatives that include flash memory chips. Sales of the company's high-end equipment declined 13% in the second quarter, for example.

Mr. Tucci hasn't publicly discussed any potential merger partners, but has never ruled out the possibility EMC would someday be acquired.

"My goal is to make sure I do the right thing," Mr. Tucci said in December in an interview with the Journal. "I've always said if the right offer came in, my pride wouldn't stand in the way."

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(END) Dow Jones Newswires

October 09, 2015 19:25 ET (23:25 GMT)

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