EMC to buy Smarts Inc

NEW YORK: Computer storage maker EMC Corp. said it would acquire privately held Smarts Inc. for $260 million, extending EMC's business into the growing market for software that manages computer networks.

Smarts, known for its InCharge real-time network systems management software, is expected to have fiscal 2004 revenue of about $60 million, EMC said.

"The acquisition is about market expansion, innovative technology and growth, Joe Tucci, chief executive of Hopkinton, Massachusetts-based EMC, said in a statement.

The deal extends EMC's reach into the market for storage networks used to create pools of data storage to more efficiently handle storage and retrieval of corporate data.

It complements EMC's purchase in October 2003 of Legato Systems for $1.37 billion. EMC in the last year has also acquired data storage company, Documentum Inc. for $1.48 billion and software maker VMware Inc. for $625 million.

The deal, while not on the same scale as the big software deals announced last week, will beef up EMC in an area where it could compete with Veritas Software Corp., a maker of storage management software that is to be bought by Symantec Corp. for $13.5 billion.

Punk Ziegel analyst Steve Berg said the deal would complement EMC's purchase of VMware, but he does not believe it was a direct response to the Symantec-Veritas deal.

"It's a technology and strategy expansion purchase," Berg said. "It fits nicely with VMware and will help enhance (EMC's) storage product strategy."

EMC said that over time, Smarts will enable EMC storage management software to correlate, determine root-cause problems and present a plan of action for critical problems across a storage network.

The acquisition is expected to be completed in the 2005 first quarter and is not expected to have a material impact to earnings per share for the 2005 fiscal year, EMC said.