EMC Plans Buyback After Profit Misses Estimates
EMC Corp. (EMC), the world’s biggest maker of storage computers, plans to buy back $1 billion in shares this year after reporting first-quarter earnings that missed analysts’ estimates as customers restrained spending.
Net income fell 1.2 percent to $580.1 million, or 26 cents a share, from $586.8 million, or 27 cents, a year earlier, the Hopkinton, Massachusetts-based company said today in a statement. Excluding some costs, profit was 39 cents a share, missing the 40-cent average of analysts’ estimates compiled by Bloomberg. Sales rose 5.8 percent to $5.39 billion, compared with the $5.42 billion average analyst projection.
EMC customers are trimming storage-computer purchases amid an uncertain economic outlook. International Business Machines Corp. (IBM) last week reported first-quarter profit that missed analysts estimates, hurt by a hardware slump. It cited the poor performance of some businesses, such as certain storage products. Sales growth at EMC’s VMWare (VMW) Inc. subsidiary has been under pressure as U.S. companies and federal agencies are reducing technology budgets.
Sales for 2013 will probably be $23.5 billion, the company reiterated today.
EMC rose less than 1 percent to $22.53 at 11:40 a.m. in New York. The shares had declined 12 percent this year through yesterday, compared with an 11 percent gain for the Standard & Poor’s 500 Index.
VMware, the software maker that’s majority-owned by EMC, yesterday forecast second-quarter sales that fell short of analysts’ projections as business customers trim spending. The shares dropped 6 percent in extended trading.
EMC Chief Financial Officer David Goulden said in March that the company will boost revenue by at least 8 percent a year and profit excluding certain costs will rise 10 percent annually through 2016 as it increases market share. Sales will exceed $30 billion in 2016, Goulden said at an analyst meeting in New York.
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