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Tax windfall spurs EMC earnings

Favorable tax audits help the storage systems manufacturer beat analysts' estimates for its third-quarter profit.

Favorable tax audits helped storage systems manufacturer EMC beat analysts' estimates for its third-quarter profit.

The company on Thursday reported a profit of $159 million, or 7 cents per share, on revenue of $1.51 billion for the quarter, which ended on Sept. 30. The profit included a boost of 2 cents per share from tax audits that went in its favor, the company said.

During the same period a year ago, the Hopkinton, Mass.-based company turned in a profit of $21 million, or 1 cent per share, on revenue of $1.26 billion.

Without the tax boost, EMC would have matched analysts' expectations for the quarter. Analysts had predicted that the company's profit would be 5 cents per share, on revenue of $1.5 billion, according to First Call. EMC's earnings matched guidance that the company gave earlier this week when it announced plans to acquire content management software company Documentum.

EMC said that it is seeing gains in market share as well as in revenue and profit.

"We are pleased that our third-quarter results reflect strong customer acceptance of EMC's comprehensive lineup of automated networked storage solutions," Joe Tucci, EMC's chief executive, said in a statement. "We are on track to achieve double-digit growth for the year, which not many large technology companies will do in this challenging economic environment."

A significant portion of EMC's third-quarter revenue came from its partnership with Dell. The PC maker sells a range of EMC storage systems and even manufactures one, the Clariion CX200.

EMC storage systems sold by Dell accounted for slightly more than 10 percent of EMC's third-quarter revenue, the storage maker said. Dell focuses on EMC Clariion systems but sells more expensive EMC Symmetrix systems as well, EMC said in a presentation detailing its earnings.

Looking ahead, EMC expects that its revenue for the fourth quarter will increase to between $1.74 billion and $1.78 billion. The company also expects to report a per-share profit of 5 cents, after charges related to its July acquisition of Legato Systems that will total about 2 cents.

EMC also predicted its Documentum acquisition will reduce its first-quarter 2004 profit by 2 cents per share. The deal is not expected to dent its profits for the remainder of year, but could add to profits during 2005.