By Lisa Beilfuss
EMC Corp. said second-quarter profit fell 17% and the
data-storage company further reduced its full-year outlook as
spending slowed in the company's traditional storage business.
Shares in EMC, down about 16% this year, fell 3.7% in premarket
trading.
The Hopkinton, Mass., company now expects to report $1.87 in
per-share profit this year, down from its last estimate of $1.91 a
share, on $25.2 billion in sales, lower than its earlier estimate
of $25.7 billion. Analysts have been expecting $1.90 a share on
$25.6 billion in revenue, according to FactSet.
Chief Executive Joe Tucci, whose employment contract expired
earlier this year, said that "while pleased" with growth of newer
products, "we also saw customers become more conservative around
refreshing their traditional infrastructures as they plan their IT
transformations." Mr. Tucci also noted ongoing geopolitical factors
in China and Russia.
EMC is best known for large systems that use disk drives to
store corporate data, but it has branched out into many other
areas, largely through acquisitions.
The company benefited in the second quarter from growth at two
software companies it controls-- VMware Inc. and Pivotal Software
Inc.--key components of what the company calls its federation
strategy. At VMware, which reported second-quarter results Tuesday,
profit grew 3% as sales rose 4% to $1.6 billion. Pivotal's revenue,
meanwhile, jumped 18% in its latest quarter.
EMC has faced pressure to change its structure from investors
that include Elliott Management Corp. The activist investor
purchased a large stake in EMC last year and has urged the company
to spin off its roughly 80% stake in VMware to help boost EMC's
share price. That pressure eased somewhat in January, after Elliott
agreed to a standstill agreement until September.
Overall, EMC reported a profit of $487 million, or 25 cents a
share, down from $589 million, or 28 cents a share, a year earlier.
On an adjusted basis that excludes stock-based compensation and
other items, EMC said it posted earnings of 43 cents a share, flat
from a year earlier.
Revenue grew 2% to $6 billion.
Analysts anticipated 41 cents in per-share profit on $6.1
billion in revenue.
Sales in the company's information infrastructure business rose
1%, driven by strength in new products including a line called
XtremIO that stores data on flash-memory chips rather than disk
drives. Revenue for that segment more than tripled in the latest
quarter.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
Access Investor Kit for EMC Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2686481027
Subscribe to WSJ: http://online.wsj.com?mod=djnwires