The acquisition bolsters EMC's effort to increase the fraction of revenue that comes from selling software instead of its traditional business of selling hardware. EMC chief executive Michael Ruettgers predicted in October that nearly one-fifth of EMC's 2001 revenue goal of $10 billion would come from software.
Softworks' software is used to ease the management of information kept on centralized storage systems. It works with several different types of computers, including IBM S/390 mainframes, Windows NT and Unix.
Softworks stock rose 0.25 to 9.56 in midday trading. In recent weeks, the stock has been climbing from an all-time low of 3 the company hit in November. EMC stock dipped 0.75 to 98.25.
Under the terms of the agreement, EMC will buy all outstanding Softworks shares at $10 each. Boards of directors at both companies have approved the agreement, but regulatory approval still must be obtained. The deal is expected to be completed by the end of the first quarter of 2000.
EMC's core business is selling storage hardware that attaches to powerful servers and mainframe computes. It expanded its line into lower-end but still fairly powerful storage systems with its acquisition of Data General in August.
EMC has increasing competition from IBM, which has a new storage product called "Shark"; from Sun Microsystems, which sells a lot of its own storage hardware bundled with servers popular among Internet companies; and from EMC's former ally Hewlett-Packard, which now sells HP-badged storage from Hitachi Data Systems.
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