EMC expected to post flat revenue after declines
EMC Corp. is scheduled to report its fourth-quarter results on Tuesday, Jan. 26 before the market opens. Below is a summary of key developments and analyst commentary related to the period.
OVERVIEW: Crimped spending on technology has hurt EMC despite corporations' need for more data-storage technology.
The company's net income has fallen in each of the last five quarters as companies tightened their budgets. Revenue has fallen in the last three quarters.
The computing market is strengthening, however, as seen in the fourth-quarter numbers from companies such as Intel Corp. and its smaller rival Advanced Micro Devices Inc., both of which reported better sales of computer microprocessors, and IBM Corp., whose revenue grew for the first time in a year and a half.
IBM also reported a 1 percent increase in revenue from its storage division, which should be a good sign for EMC because that IBM division competes with EMC and had been declining since the summer of 2008.
In addition, Gartner Inc. is predicting that worldwide spending on information technology, which includes computing hardware like data-storage machines, would improve at a faster rate than expected in 2010. However, the research firm cautions that expected currency fluctuations played a big part in its higher forecast.
EMC is the world's No. 1 maker of external disk storage — storage that is sold separately from servers.
Recent news about EMC includes the company's announcement earlier this month that it would acquire Archer Technologies, whose products help companies set data policies that meet industry and government regulations.
In November, EMC lowered its 2009 profit forecast because of a $100 million charge it will take in the fourth quarter from a restructuring of international subsidiaries.
BY THE NUMBERS: Analysts polled by Thomson Reuters expect EMC to earn 30 cents per share, excluding items, on flat revenue of $4.03 billion. In the same period last year, EMC earned 32 cents per share, excluding items.
ANALYST TAKE: Deutsche Bank Securities analyst Chris Whitmore wrote in a recent note to clients that he expected that EMC benefited from a "pent-up demand for storage" but that profit margins could be pressured because of the company's investments in research and its software division.
"We believe storage will be among the strongest product areas in (information technology) spending this year," Whitmore wrote.
STOCK PERFORMANCE: EMC's stock rose 6 percent in the fourth quarter to $17.47 at the end of December.