Zacks_Analysts' Blog : EMC Partners with SDL - Analyst Blog

A leading provider of information infrastructure solutions, EMC Corp. (EMC) has signed an agreement with the largest global information management solutions provider, SDL. The partnership is expected to complement EMC’s existing relationships in Web Content Management (WCM) and Web Engagement Management (WEM) markets.

Currently, EMC offers web content management services in partnership with FatWire. EMC’s Documentum FatWire Core Web Content Management provides comprehensive web content management for building, deploying and managing large-scale websites.

We believe the partnership with SDL will enable EMC to provide better online marketing offerings to its customers, thereby helping EMC build global brand awareness and drive revenue in cost-effective ways.

SDL’s leading web content management platform, SDL Tridion enables global and multilingual website management, multi-channel engagement through the web, mobile and email, brand management and advanced targeting, profiling and personalization.

Further, SDL’s pricing and licensing structures are likely to help EMC cater to a more diverse clientele, resulting in higher revenue growth over the long term, in our view.

SDL boasts a strong client base, which includes companies such as Canon Inc. (CAJ), GlaxoSmithKline Plc (GSK), Hewlett-Packard Co. (HPQ), Microsoft Corp. (MSFT), NetApp Inc. (NTAP), SAP AG (SAP) and Sony Corp. (SNE). We expect EMC to gain market share in the WCM market based on this strong clientele.

According to the research firm Gartner, the web content management market is expected to grow annually at a CAGR of 14% from 2009 to 2014. More than 60% of the worldwide WCM revenue comes from North America while Europe, Middle East and Africa accounts for 26% and Asia/Pacific 11% of the total revenue.

We believe the partnership with SDL will enhance EMC’s competitive prowess in the WCM and WEM markets where it faces strong competition from International Business Machines Corp. (IBM), Iron Mountain Inc. (IRM), Microsoft, Oracle Corp. (ORCL) and Open Text.

Recommendation

Currently, EMC has a Zacks #3 Rank, which translates into a short-term Hold rating. We also maintain our long-term Neutral recommendation on the stock.