EMC Fourth-Quarter Profit Increases 61% on Demand for Storage Computers
EMC Corp., the world’s biggest maker of storage computers, reported a 61 percent increase in fourth- quarter profit and predicted full-year earnings topping analysts’ estimates as companies upgrade their data centers.
Profit, excluding some costs, rose to 42 cents a share, EMC said today. Analysts estimated 41 cents, the average of projections compiled by Bloomberg. Sales increased 19 percent to $4.89 billion, topping the $4.79 billion average estimate.
Companies are spending more on information technology and investing in new storage computers to hold the increasing amounts of data and manage disaster recovery, according to Daniel Ives, an analyst at FBR Capital Markets. New products are helping EMC sell more to the largest corporations, while demand remains stable among mid-sized companies, he said.
“The company’s better-than-expected initial guidance range for 2011 on both the top and bottom line is a positive indicator for EMC as well as in improving IT spending environment,” Ives said in a note to clients today. Ives is based in New York and rates the stock “outperform.”
EMC rose 56 cents to $24.39 at 4 p.m. in New York Stock Exchange composite trading. The shares climbed 31 percent last year.
The company, based in Hopkinton, Massachusetts, said full- year sales will be $19.6 billion and profit, excluding some items, will be $1.46 a share. Analysts on average estimate full- year profit of $1.45 and sales of $19 billion.
“The market is primed and ready and we have the right assets to help our customers,” Chief Financial Officer David Goulden said on a conference call with analysts.
Net income last quarter rose to $628.6 million, or 29 cents a share, from $390.6 million, or 19 cents, a year earlier.
The company said it plans to buy back $1.5 billion in shares this year.
EMC has a majority stake in VMware Inc., the biggest maker of so-called virtualization programs, which let computers run multiple operating systems. VMware yesterday reported fourth- quarter profit more than doubled to $119.9 million on rising demand for its software. Still, VMware shares slumped 3.9 percent today after the company forecast a slowdown in new license sales and said that margins would be little changed this year.
(EMC had a conference call today to discuss earnings. Go to http://www.emc.com/about/investor-relations/index.htm for a replay.)
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