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Will IBM Acquire EMC?

Merger speculation reached new levels of madness this week, perhaps spurred on by the Hewlett-Packard Co. (NYSE: HWP)/Compaq Computer Corp. (NYSE: CPQ) deal and the feeling that no matter how hare-brained a merger might sound, these days "you just never know."

The rumor du jour is that IBM Corp. (NYSE: IBM) is in talks to acquire EMC Corp. (NYSE: EMC). While this one's been doing the rounds for months, it's finally reached a point where several analysts are preparing what if” reports on the subject. (None ready for publication yet, sources say.)

Could it be true? Would a merger between these two even make sense?

“However preposterous or reasonable it might be, I am not going to comment on it from any angle,” said Mark Fredrickson, communications director at EMC. IBM wasn’t quite so animated. “We do not comment on rumor or speculation,” said an official.

On the whole, Wall Street analysts think it’s pretty unlikely the two would get together, although they point out that IBM, with a market cap of about $160 billion and plenty of cash in the bank, could afford EMC. The storage giant’s stock price has plummeted from over $100 a share last year to just over $11 today -- giving it a market cap of around $26 billion.

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