EMC tops fourth-quarter expectations
The company says revenue rose 25 percent and profit outpaced analysts' predictions, thanks to higher demand for its data storage systems and software.
The Hopkinton, Mass., company posted earnings of $220 million, or 9 cents per share. The profit included a gain of 1 cent per share from an income tax benefit, but that was partially offset by charges related to EMC's acquisitions of software companies Legato Systems and Documentum, which closed during the quarter, which ended on Dec. 31.
EMC's fourth-quarter revenue reached $1.86 billion. During the same period a year ago, the company lost $64 million, or a loss of 3 cents per share, on revenue of $1.49 billion.
On average, 25 analysts surveyed by Thomson First Call, expected EMC to post a profit of 7 cents a share on revenue of $1.8 billion.
EMC finished 2003 with revenue of $6.2 billion, up 15 percent year over year from 2002. It turned a profit of $496 million, or 22 cents per share, during 2003, versus a loss of 5 cents in the preceding year.
EMC said revenue increased in all its major business segments and geographies during the fourth quarter.
"The strength of our broadened product portfolio, combined with outstanding execution and an improving global economy, made for a solid finish to 2003," Joe Tucci, EMC's CEO, said in a statement. "Our information lifecycle management strategy is being well received by both long-standing and new customers who are grappling with the challenges of compliance, information protection and constrained budgets. EMC strengthened its market position and clearly gained share in 2003."
As is typical when moving from the fourth quarter of one year to the first quarter of the next, EMC said, revenue is likely to decline slightly during the current quarter.
The company predicts revenue of between $1.8 and $1.84 billion for the quarter and earnings per share of 5 cents, including a charge of 1 cent per share for its acquisition of server software maker VMWare, which was completed Jan. 9.
EMC expects 2004 to be a good year. It predicts that revenue will rise by about 25 percent to top $7.8 billion.
"It will be a better year for (information technology), a better year for storage specifically and a better year for EMC," Tucci said in a conference call to discuss the earnings release. The company predicts that IT spending will increase between 3 percent and 4 percent this year.
Signaling an early gain, EMC said the U.S. Department of Defense has awarded it two software contracts worth a total of $44 million. EMC's software sales totaled $444 million during the fourth quarter--about 24 percent of the company's revenue. Hardware, on the other hand, was good for about $1 billion in revenue during the quarter.
One way EMC expects to hit its target of 25 percent revenue growth for 2004 is by introducing new products more quickly.
"These new products will play a major role in our growth in 2004," Tucci said.
EMC plans to get started by launching a new storage platform on Feb. 9, he added.
Meanwhile, EMC's 2-year-old relationship with PC maker Dell continues to help out. Dell, which can sell any EMC storage system, represented 30 percent or more of EMC's $270 million in Clariion disk array sales during the quarter, EMC said.
So far, the companies have worked together to install more than 7,000 storage systems, they said in November.