Elliott Offers Letter to EMC's Board: Proposing Spinoff of VMware

Elliott Management Corporation (“Elliott”) today sent a letter to the Board of Directors of EMC Corporation EMC detailing its recommendations on the right path forward for EMC. Elliott believes that EMC's Federation structure obscures enormous value at the company and that the Board of Directors and Management should pursue pathways to recognize this value, including a separation of VMware from Core EMC and/or various M&A opportunities. Elliott, affiliates of which collectively own or have economic exposure to approximately 2.2% of the common stock and equivalents of EMC Corporation, is a multi-strategy investment firm with deep experience investing in public and private companies. Full text of the letter follows: October 8, 2014 The Board of Directors EMC Corp. 176 South Street Hopkinton, Massachusetts 01748 Attn: Joe Tucci, Chairman & CEO Dear Joe and Members of the Board: I am writing to you on behalf of Elliott Associates, L.P. and Elliott International, L.P. (collectively, “Elliott” or “we”), which collectively own 2.2% of the common stock and equivalents of EMC Corp. (the “Company” or “EMC”), making us one of your largest shareholders. We greatly appreciate the dialogue we have established with Joe and his team and we look forward to continuing it. Since the publication of news reports detailing our position, we have received numerous calls from fellow shareholders requesting our views and sharing theirs. In addition, EMC management has spoken publicly about their view of the Company's structure. The purpose of today's letter is to share our thoughts on the right path forward. We hope this will help to inform Joe and the Board as part of EMC's current review process regarding the long-term value-maximizing pathway for the Company. The summary takeaways from our letter, which are more fully described below, are: * EMC's current structure – “the Federation” – obscures enormous value at EMC * EMC should pursue pathways to recognize this value, including a separation of VMware from Core EMC and/or various M&A opportunities Elliott Elliott is an investment firm founded in 1977 that today manages approximately $25 billion of capital for both institutional and individual investors. We are a multi-strategy firm based in New York, active in debt, equities, commodities, currencies and various other asset classes across a range of industries. Investing in the technology sector is one of our most active efforts at Elliott and one in which we have built a long track record. Our approach to EMC is consistent with our approach to many of our current and previous technology investments. We have conducted extensive research to better understand the Company's operations and strategy, including working with respected technology and management consultants to examine the broader storage, data center virtualization, security, big data analytics and end-user computing landscapes, and EMC's position within those markets. We have also worked with engineers to examine and assess the capabilities and competitive positioning of EMC's products and technologies across all of its offerings. Our efforts during the past year include a survey of over 580 EMC and VMware customers, enabling us to better understand the storage and data center virtualization landscape from a buyer's perspective and to identify what factors are most important in driving purchasing behavior. We have also retained senior executives in the storage, data center virtualization and broader technology marketplaces to advise us on higher-level corporate considerations. We believe this time- and resource-intensive exercise has given us a strong understanding of the markets in which EMC participates, as well as a deep appreciation for the Company's competitive strengths and challenges. Our Thoughts on EMC We have grouped our thoughts into the following three categories, which we discuss more expansively throughout the remainder of this letter: 1. The Federation 2. EMC and the Reality Today 3. The Right Course Forward It is important that we convey that Joe, for whom Elliott has the highest respect, and his team deserve immense credit for assembling, integrating and building EMC into what it is today. The substantial value opportunity we describe in Section 3 is only possible due to the high quality of the Company and its individual businesses. The Federation EMC has developed an incredible set of assets including EMC II, VMware, RSA and Pivotal. Each of these companies is comprised of acquired and organically developed product offerings and businesses that by themselves are frequently the best in the industry. It is well known and has been broadly recognized by those who follow EMC and its markets that the structure of the Company is unusual: VMware, Pivotal, RSA and EMC II are run as independent companies. Each of VMware, EMC II and Pivotal is headed by a CEO who reports to Joe. RSA is headed by a CEO-level executive who reports to David Goulden, EMC II's CEO (and, until last week, CFO of EMC). EMC management refers to this arrangement as “The Federation.” (Follow this link for a graphic illustration of the Federation: http://elliott-graphics.com/slide1.html). The origin of this unorthodox structure is an important part of the story: EMC used to be only what is now called “EMC II,” the storage company. Over the years, however, EMC bought VMware (2004), RSA (2006), and the assets that comprise Pivotal (2009-13), among many other acquisitions. Joe had the foresight to allow VMware to develop independently as a separate and distinct company, paving the way for its extraordinary success in server virtualization and positioning it to enable the virtualization of other components of the data center. Much has changed since 2004, though, when VMware was solely a server virtualization company and EMC was primarily selling high-end storage arrays. Indeed, the correct decision more than a decade ago is not necessarily the right one for today or for the future. EMC and the Reality Today The reality today is that the Federation structure, which may have served EMC well years ago, no longer does. We have compiled considerable detail to support this conclusion and summarize our thoughts briefly below: Stock Price Underperformance: EMC's stock price has underperformed its A.   proxy peers and the market over all relevant timeframes while this structure has been in place. B. Core EMC is Deeply Undervalued: The Federation structure has led to a widely-recognized undervaluation of “Core EMC” (EMC excluding VMware). EMC and VMware now compete: Both EMC and VMware have grown and are now C. competing against one another, confusing customers, employees, Street analysts and shareholders. EMC II and VMware hinder one another: Though separate companies, they are D. still “together,” a fact that inhibits each business's ability to partner. The Federation and Joe's Tenure: Joe is the architect and manager of the E. Federation. It is not viable to keep the structure as it stands today beyond his tenure as CEO.   Stock Price Underperformance Though EMC is a leader in numerous markets with great products, EMC's stock price has deeply underperformed its proxy peers and the market over all relevant time periods. It is important to keep in mind that the current structure (EMC + VMware) has existed over the entire timeframe illustrated below. The below chart highlights EMC's stark underperformance as of July 18, 2014, the trading day prior to the public disclosure of Elliott's position in EMC.