EMC Corp. (EMC), the world’s biggest maker of storage computers, forecast 2014 earnings that may fall short of analysts’ estimates after reporting a drop in first-quarter profit.
EMC predicted adjusted earnings per share this year at $1.90, it said in a statement today. That compares with the $1.94 average estimate of analysts surveyed by Bloomberg. First-quarter net income fell to $392 million from $580 million a year earlier, the Hopkinton, Massachusetts-based company said.
Some businesses are slowing purchases, particularly of high-end storage machines, and EMC is trying to focus more attention on middle-tier products as well as newer initiatives such as replacing storage machines with software. The company in January provided a lower-than-expected forecast and said it would take a charge tied to eliminating 1,000 jobs.
“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,” David Goulden, chief executive officer of EMC Information Infrastructure and the company’s chief financial officer, said in today’s statement.
U.S. revenue was flat in the first quarter, and represented 52 percent of sales, while non-U.S. revenue increased 3 percent.
EMC’s shares fell 3.2 percent to $25.91 at the close in New York.
EMC is trying to boost growth by focusing on newer areas such as flash-based storage, replacing storage machines with software and data-analysis programs, Daniel Ives, an analyst at FBR Capital Markets, wrote in a note to clients. Businesses are continuing to purchase EMC’s storage products, particularly its mid-priced machines and newer technologies such as those made by its Isilon unit, said Ives, who has the equivalent of a buy rating on the stock.
First-quarter sales rose 1.7 percent to $5.48 billion with adjusted earnings of 35 cents a share. Analysts had projected adjusted earnings per share of 35 cents on sales of $5.42 billion, according to the average estimates compiled by Bloomberg.
Job cuts that EMC disclosed in January will result in charges of $100 million to $120 million, including cash payments of $95 million to $114 million, the company said at the time.
EMC is the majority owner of VMware Inc. (VMW), a Palo Alto, California-based maker of software for running multiple operating systems on a single machine, and that unit yesterday reported sales and profit that slightly exceeded analysts’ estimates.
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