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Storage spending boosts EMC forecast

The storage system maker says financial results for the last quarter of 2002 will be better than expected, in part because of new midrange storage systems sold in cooperation with Dell.

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Stephen Shankland
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EMC on Monday said financial results for the last quarter of 2002 will be better than expected, in part because of new midrange storage systems sold in cooperation with Dell Computer.

Powerful competition and slower corporate spending have hammered the once-dominant storage system maker, but financial results for the most recent quarter were boosted by better-than-expected revenue of $1.47 billion, the company said. EMC announced the preliminary figures Monday but plans to release final fourth-quarter results Jan. 23.

The $1.47 billion in revenue is above the $1.24 billion expected by analysts surveyed by First Call. In addition, the Hopkinton, Mass.-based company plans to report net income of 1 cent to 2 cents per share, not including restructuring charges, well ahead of the loss of 2 cents that analysts expected.

Including a restructuring charge of $160 million for the quarter, EMC expects a loss of 2 cents to 4 cents per share, the company said.

The revenue boost came in part from sales of new models in its Clariion line of midrange storage systems, EMC said.

EMC's high-end Symmetrix line, a product that until recently commanded plump profit margins, has been under heavy pressure from Hitachi Data Systems' Lightning system and IBM's Enterprise Storage System, code-named Shark. EMC's woes have been compounded by a storage market that in general has been gloomy, and the company warned in October of about 1,380 job cuts.

To deal with the competitive situation, EMC is placing more emphasis on its midrange Clariion line. Through a partnership, Dell sells three models of that line.

"We are encouraged by the strength of these results," Joe Tucci, EMC's chief executive, said in a statement. "Overall, customer spending was better than we anticipated in the fourth quarter. In addition, demand was particularly strong for our newly introduced CX family of Clariion storage platforms."