RBC Capital Mkts Downgraded EMC to Sector Perform from Outperform; Doesn't appear to have much effect at 11:56 EST vs. market. We'll see at closing and later in the week when EMC/VMW reports earnings.
"OptionSmith has a bullish position in EMC, and this name had been a rumored takeover candidate all of 3 weeks ago."
But now the option action is taking on a much more bearish tone ahead of Thursday’s earnings report. So far, over 15,000 puts have traded, compared to less than 2,500 calls. The most active strikes are the May $10/11/12s, in which it looks like someone bought the butterfly 3,000 times for $0.20 net debit. The position achieves a maximum profit of $0.80 if shares decline to $11 on expiration.
IBM Stores Up For Next Acquisition (EMC) by Ryan C. Fuhrmann
"Potential buyout targets include EMC and VMWare (NYSE:VMW), which would be easy enough for IBM to digest and would help offset the recent declines in the systems and technology group. This would also increase its data-storage capabilities, which for the most part are holding up well in the current economic environment and especially in VMWare's case. Even though business activity has slowed, the need to store increasing amounts of corporate data has not."
VMware Proves Virtualization Not Recession-Proof (VMW, EMC)
If EMC doesn't meet or exceed Street expectations tomorrow morning, expect a drop...
"VMware Inc. (NYSE: VMW) has just posted its first quarter earnings. The true leader in the emerging field of virtualization reported a non-GAAP earnings of $0.25 EPS and $470.3 in revenues. Thomson Reuters had estimates at $0.20 EPS and almost $474.4 million in revenues. This may also set the tone for tomorrow’s report from near-parent EMC Corp. (NYSE: EMC)."
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