Although government contracts don’t sound appealing right now, once Uncle Sam gets back on track the Department of Homeland Security is looking to secure Big Data vendors to provide billions of dollars in products and services over many years.
EMC (EMC) will be in the running. In late 2012, the $50 billion company formed a separate organization called Pivotal Initiative, headed up by VMware’s (VMW) former CEO Paul Maritz. It combines VMware’s data center software and EMC’s big data technology. It is expected to bring in revenue of about $300 million in 2013. Revenue is projected to grow to over $1 billion by 2017. EMC actually owns 33% of VMware.
General Electric (GE) also invested $105 million to buy a 10% stake in Pivotal Initiative. Best of all, EMC’s products are compatible with many different platforms including IBM (IBM) and Oracle (ORCL).
EMC brings value to the table—just what a portfolio needs to weather storms. It trades at 14.5 times this year’s earnings, with a clean balance sheet of $11.15 billion in cash. It recently started paying a small dividend of 1.6%, but that’s expected to increase steadily.
The company reported a 5.7% increase in revenue and 7.8% gain in net income to $701 million for the second fiscal quarter ended June 30. Up 3.6% in the third quarter and flat year-to-date, EMC has plenty of room to grow.