By Ben Fox Rubin
EMC Corp. said its fourth-quarter earnings grew 17% as the
data-storage provider benefited from strong growth in its emerging
storage business.
However, its stock declined 2.5% premarket to $24.75 after the
company forecast 2014 results below market expectations. As of
Tuesday's close, the stock was up 5.8% over the past three
months.
For the new year, the company forecast adjusted earnings of
$1.95 a share on revenue of $24.5 billion. Analysts surveyed by
Thomson Reuters predicted $2.03 a share and $24.96 billion.
Adjusted earnings for the first quarter are expected to be 35 cents
a share, below estimates of 43 cents.
Mizuho Securities said this week that storage revenue benefited
from enterprises' flush budgets at the end of the year, but it
warned that storage likely received a lower priority versus server
projects. The brokerage said its checks indicated that storage
spending "remained somewhat challenging," an issue EMC Chief
Financial Officer David Goulden addressed in a statement Wednesday
when he said IT spending growth was lower than EMC expected in
2013. Still, he said EMC achieved strong revenue and profit
growth.
On Tuesday, EMC's subsidiary VMware Inc. said its fourth-quarter
profit soared 63% as the virtualization-software maker posted
strong growth in license revenue. However, shares slipped after
hours when the company warned it expects its operating margins
should decline following its acquisition of AirWatch later this
year.
EMC reported a profit of $1.02 billion, or 48 cents a share, up
from $870 million, or 39 cents a share, a year earlier. Excluding
items such as stock-based compensation and other items, per-share
earnings were 60 cents in the latest period, up from 54 cents.
Revenue grew 11% to $6.68 billion.
Analysts polled by Thomson Reuters forecast adjusted earnings of
59 cents a share on revenue of $6.64 billion.
Cost of product sales rose 16%, and cost of services grew
13%.
EMC's information infrastructure revenue increased rose 9.7%.
The company's emerging storage business continued growing, with a
73% revenue increase, propelled by the launch of EMC XtremIO.
Write to Ben Fox Rubin at ben.rubin@wsj.com
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