By Erin McCarthy
EMC Corp. said Wednesday its first-quarter earnings fell 32% as
a rise in some of the data-storage provider's costs offset revenue
growth.
EMC has spent much of recent years benefiting from a prime
position at the high end of the market for massive troves of
computer data, but late last year management warned IT spending was
under pressure.
In addition, the company is facing competition from numerous
fronts, from Amazon.com Inc. to startups like Box Inc.
Data storage and management is increasingly shifting to the
cloud, where such companies as Amazon promise cost savings and
delivery of the latest technology faster than a company can update
its data center--long EMC's domain.
"EMC is at the threshold of expansive opportunity. While planned
business practice changes had a negative impact on year-over-year
revenue and EPS growth in the quarter, we are very confident we are
on the right track," said David Goulden, chief executive of EMC
Information Infrastructure and EMC's chief financial officer.
EMC reported a profit of $392 million, or 19 cents a share, down
from $580 million, or 26 cents a share, a year earlier. Excluding
stock-based compensation and other items, per-share earnings were
35 cents in the latest period, down from 38.7 cents.
Revenue increased 1.7% to $5.48 billion.
The company had expected adjusted earnings of 34 cents a share,
taking into account spinoff VMware Inc.'s acquisition of AirWatch.
Analysts had forecast $5.48 billion in revenue.
Selling, general and administrative costs rose 8.1%, while cost
of services jumped 14%.
EMC's information infrastructure revenue slipped 3%. The
company's emerging storage business continued growing, with a 81%
surge in revenue.
The company said adjusted earnings for the year should be $1.90
a share, reflecting a hit of five cents a share due to the AirWatch
deal. It now expects revenue of $24.58 billion, compared with its
prior forecast of $24.5 billion.
The company's board also raised its quarterly dividend by 15%
cents to 11.5 cents a share.
The stock is up 6.4% so far this year.
Steven Rosenbush contributed to this article.
Write to Erin McCarthy at erin.mccarthy@wsj.com
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