Daily Tech Snippet: Tuesday, October 13

• Facebook adds dedicated shopping section in continued move into e-commerce: Facebook Inc (FB.O) wants its users to shop for clothes and other products from their mobile phones without ever leaving its app. In an effort to move further into e-commerce and compete with Amazon Inc’s (AMZN.O) retail offerings, Facebook announced Monday it is testing several ad features that allow users to shop directly through its app. Few users make purchases on mobile phones because it is slow and cumbersome, but Facebook hopes to win over more ad dollars by smoothing the process. Mobile purchases make up less than 2 percent of all retail sales, according to research firm eMarketer. Among the new features are ads that take a user through a specific brand's products without redirecting them to another site. For example, a user who clicks on an ad from a boutique could see an expanded page that displays numerous clothing items. Businesses on Facebook will also be able to display products for purchase directly on their own pages. And users will be able to purchase products directly on Facebook through a “buy now” button that will be more widely available. The 1.5-billion-member social network has also added a new section on its app that takes users directly to a shopping page where they can browse among numerous brands from a select group of small businesses that will gradually expand. “From Facebook’s perspective, they’re addressing a pain point for retailers,” said Catherine Boyle, an analyst at eMarketer. “They will attract serious ad dollars with this offering.”

• Dell buys EMC for $67 billion in largest deal in tech history: Dell announced Monday it had reached a deal to acquire cloud computing giant EMC for $67 billion -- the largest acquisition in the history of the technology industry. The deal signals that Dell believes it is best to go big at a time when many older technology firms such as Hewlett-Packard are paring down and becoming smaller, nimbler companies. Traditionally known as a personal PC-maker, Dell has more recently set its ambitions on the high-tech business world and portrayed itself as an all-in-one provider of equipment and services. Dell and equity firm Silver Lake Partners said in a press release Monday that buying EMC, a major data storage company, broadens its appeal to those lucrative corporate customers. In 2007, Dell returned to run the company he founded and took the company private again in 2013 with backing from Silver Lake Partners. The EMC transaction is expected to close in the “middle of next year,” executives said on a call with analysts Monday morning. It will take time for Dell and EMC to integrate their businesses if the deal closes, Hewitt said. For one, he noted that EMC has carved its niche by offering comprehensive — and not inexpensive — software solutions to businesses, which is where Dell wants to go. But, he noted, Dell's philosophy is deeply rooted in providing cost-efficiency. As Dell has struggled to adapt its PC business for the modern age, EMC has also been under pressure from activist investors to spin off its cloud and virtualization business called VMWare for more than year as its faced heavy competition from flash storage and cloud storage firms. It has also faced pointed questions about its "federated" business structure, which strung together three firms -- its traditional business, VMWare and its software development firm Pivotal. Analysts had formerly counted Dell, as well as HP, Cisco and Oracle, as potential buyers for the firm. 

• SAP third-quarter operating profit beats estimates on mature markets: SAP said third-quarter operating profit, excluding special items, rose to 1.62 billion euros ($1.84 billion), beating the most optimistic estimate among 14 analysts, with individual estimates ranging from 1.45 billion to 1.59 billion euros, according to Thomson Reuters data. Third-quarter total revenue of 4.98 billion euros was slightly ahead of the average expectation of 4.93 billion. Europe's largest software maker said it was sticking to its outlook for the full year for non-IFRS operating profit of 5.6 billion euros to 5.9 billion euros at constant currencies, which represents flat growth to a rise of as much as 5 percent from 5.6 billion euros last year.

• Financing in the Dell-EMC Deal: Under the terms of the deal announced Monday, EMC has negotiated a "go-shop" provision in the preliminary deal that gives it the opportunity to seek out other buyers. Yet analysts say that while the Dell deal may slightly undervalue EMC shares, it's still a good deal. Shares of EMC rose about 1.5 percent during regular trading Monday. While the company will be a private concern after the deal is closed, a portion of its shares will continue to trade publicly. EMC investors will receive roughly $33.15 per share — they will receive $24.05 per share and a type of publicly tradeable stock "linked to a portion of EMC’s economic interest" in VMWare. Dell plans to pay $24.05 a share in cash plus tracking stock in EMC’s prize holding, software maker VMware Inc., valued at about $9 for each EMC share. EMC’s stock climbed 1.8 percent Monday to $28.35. Dell will add almost $50 billion to its debt load to complete the purchase, people familiar with the matter said, on top of the $11 billion it already is carrying. The combined company will be run by Michael Dell, the chief executive officer of the company he founded and took private for about $25 billion two years ago. He is financing the takeover with his MSD Partners investment vehicle, Silver Lake and Singapore state-owned investment company Temasek Holdings. He also is using debt, the VMware tracking stock and cash on hand. The deal will combine EMC’s dominance in devices that store data with closely held Dell’s No. 2 position in servers, the powerful machines that help companies handle big computing challenges.

• Implications for the Data Center Business: The deal will help Dell raise its profile in data centers, the modern factories of the digital age that house servers, networking gear and storage systems. EMC had 21 percent of the storage market last year, about twice what Dell had, according to data compiled by Bloomberg. While Dell has been outperforming some of its rivals, the company is grappling with sagging demand for personal computers. During the third quarter, overall shipments declined 7.7 percent, according to Gartner Inc. Still, Dell was able to post a small gain of 0.5 percent while larger rivals declined.

• Implications for VMWare: EMC investors will receive roughly $33.15 per share — they will receive $24.05 per share and a type of publicly tradeable stock "linked to a portion of EMC’s economic interest" in VMWare. VMware declined 8 percent to $72.27 on Monday amid concern that the creation of a tracking stock will weigh on the company’s valuation. Analysts at Mizuho Securities USA Inc. lowered their target price for VMware to $75 from $95. EMC rival Pure Storage Inc. rose 8.8 percent to $18.06, exceeding its public offering price of $17 for the first time since shares began trading Wednesday.

• Silver Lake Had Explored Sale of Dell’s PC Business Ahead of EMC Deal: Private equity firm Silver Lake, co-owners of Dell, last week approached Hewlett-Packard, Lenovo and Huawei to explore the possibility of selling off Dell’s personal computing business, sources familiar with the matter told Re/code. But by Monday, Dell proposed to pay a combined $67 billion to acquire the data storage company EMC and its subsidiary VMware in what is the largest proposed technology M&A deal in history. It was not immediately clear if Silver Lake acted alone or if Dell was consulted. It is also unclear if Silver Lake or Dell would continue to explore a sale at this point. The approach comes as the once thriving PC industry grapples with declining sales. That’s partially why none of the parties that were approached engaged further. Nearly half of Dell’s annual revenue come from the PC business, or about $27 billion, according to estimates by Goldman Sachs.