This week the financial journals reported that hedge fund Elliott Management Corporation has taken a stake of over $1bn in EMC Corporation and said that it intends to put pressure on the company to break itself up. Elliott believes that this would ‘unlock shareholder value’. The idea, presumably, is that EMC is not receiving full value from the market at the moment - but that depends on how you define the value that EMC's structure already gives shareholders.

We don’t have to look very far into the federal structure of EMC to see why Elliott Management Corporation may think that there are parts of EMC which are not pulling their weight. The company’s profits to earnings ratio has also been slowly declining.

However, that’s better than quickly declining - EMC has a strong and healthy balance sheet. So, does it make sense to break the company apart as Elliott Management suggests?

Elliott Management suggest that EMC’s stock price would receive a substantial jolt if they were to spin off assets such as VMware and RSA Security. However, based on the high rate of earnings growth that VMware has already achieved, and the high earnings growth it is likely to achieve in the future as the world continues to embrace virtualization technology, this does not support Elliott Management's argument. VMware contributed less than a quarter of EMC's revenue last year. There are few clear facts with which to base a decision.

Some analysts are also saying that the sale would ‘unlock shareholder value’ up to $12bn but what value would be left in the remaining company is pure conjecture and no value has been put on the added-value which EMC’s storage brings to the VMWare brands in associated sales. If you bought VMWare would you go elsewhere for your storage?

However the problem remains that the share price is stagnant - its stock was up a mere 1% in the three years before reports of Elliott’s stake.

Arguably the RSA Security division could be spun off with little impact on the remaining company. However despite the Pivotal cloud division joint venture, and VMWare allowing the running of multiple operating systems, EMC has seen storage rivals such as Actifio starting to snap at its heels. How it keeps them at bay will be the secret to staying together.

Talking to Bloomberg in May 2014, EMC CEO Joe Tucci said: “If you break it up, you just weaken every part. So I just think it’s better together.” 

Those sentiments might not be enough if shareholders don’t get some quick movement and that will mean Tucci has to come up with a better strategy than more of the same and a rather tired slogan.