EMC Says Acquisition by Dell on Track As Profit Rises 19% -- Update
July 18 2016 - 6:15PM
Dow Jones News
By Tess Stynes
EMC Corp. said Dell Inc.'s roughly $60 billion deal for the
data-storage company remains on track as the company reported that
its second-quarter earnings rose 19%.
The Hopkinton, Mass., company's shares rose 1.9% to $28.05 in
recent after-hours trading as per-share earnings, excluding certain
one-time items, and revenue beat expectations.
Elsewhere, EMC-controlled VMware Inc. posted
better-than-expected results for its latest quarter. Shares of
VMware, which makes software that boosts the computing efficiency
of data centers, rose about 10% to $68.80 in after-hours trading.
The stock is down 26% over the past year.
EMC Chief Executive Joe Tucci said the pending cash-and-stock
deal, the largest technology merger in history, goes to a vote by
EMC shareholders on Tuesday. After that, all that will remain is a
needed decision from Chinese regulators.
The value of the deal -- partly pegged to publicly traded EMC
subsidiary VMware Inc.'s stock -- has declined by roughly $7
billion since it was announced. VMWare's stock price has fallen
roughly 20% during the period, while EMC has fallen 1.1%.
Mr. Tucci said, "We had a strong second quarter and are well
positioned as we look forward to combining with Dell."
Over all, EMC reported a profit of $581 million, or 29 cents a
share, up from $487 million, or 25 cents a share, a year earlier.
Excluding stock-based compensation and other items, adjusted
per-share earnings rose to 45 cents from 43 cents. Revenue
increased 0.3% to $6.02 billion.
Chief Financial Officer Denis Cashman said that adjusting for
the effect of a higher-than-expected increase in unshipped orders,
caused by the timing of bookings, revenue rose 1%.
Analysts polled by Thomson Reuters expected per-share profit of
41 cents and revenue of $5.99 billion.
Dell Inc.'s parent company Denali Holdings last month reported
an operating loss that was wider than it had predicted on costs
stemming from the company's pending acquisition of EMC and
softer-than-expected sales.
As for VMware, the company earned $265 million, or 62 cents a
share, in the quarter ended June 30, compared with a profit of $172
million, or 40 cents a share, a year earlier. Excluding certain
items, adjusted per-share earnings rose to 97 cents from 93 cents a
year ago.
Sales rose 11.3% to $1.69 billion.
Analysts surveyed by Thomson Reuters had expected adjusted
earnings of 95 cents a share on $1.68 billion in revenue.
Earlier in the year, the Palo Alto, Calif., company said it
planned to buy back $1.2 billion of its own stock by the end of the
year and launched a restructuring plan that aimed to cut as many as
800 positions.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
July 18, 2016 18:00 ET (22:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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