EMC Jumps as Quarterly Earnings Rise 32% on Storage, VMware

EMC Corp. (EMC) gained the most in almost three years after reporting a 32 percent increase in fourth- quarter earnings as data growth spurs demand for its products and software from majority-owned VMware Inc. (VMW)

The world’s biggest maker of storage computers rose 7.3 percent to $25.14 at the close in New York, the biggest gain since March 2009. The stock fell 5.9 percent in 2011. VMware rose 7.7 percent to $92.66.

EMC is benefiting as a rising tide of digital data fuels purchases of storage gear, while a boom in data-center building generates demand for VMware software designed to make servers more efficient. The company has used acquisitions like Data Domain, Isilon and Greenplum to focus on growing parts of the data storage and backup market, Maynard Um, an analyst at UBS AG who recommends buying the stock, said in a note to investors.

“They continue to gain market share really across all segments of the storage market,” said Brian S. Freed, an analyst at Wunderlich Securities Inc. in Denver who rates the shares “buy.”

Net income rose to $832 million, or 38 cents a share, from $628.6 million, or 29 cents, a year earlier, the Hopkinton, Massachusetts-based company said today in a statement. Excluding some items, profit was 49 cents, beating the 46-cent average estimate of analysts surveyed by Bloomberg.

Sales (EMC) advanced 14 percent to $5.57 billion topping the $5.49 billion average estimate.

‘Guidance Looks Beatable’

EMC forecast 2012 revenues of $22 billion, in line with analysts’ estimates. The company anticipates adjusted earnings of $1.70 a share, 1 cent below the average estimate.

The “2012 guidance looks beatable,” Rob Cihra, an analyst at Evercore Partners Inc. in New York, said in a note. “We continue to see prospects for upside.” Cihra has an “overweight” rating on the stock.

The company excludes stock-based compensation, amortization, restructuring and acquisition-related charges from its adjusted earnings.

VMware, the biggest maker of software that lets computers run multiple operating systems, yesterday reported sales and profit that topped analysts’ estimates as corporations bought programs to make servers more efficient. Sales rose 27 percent to $1.06 billion, compared with the $1.05 billion average prediction.

To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.