EMC net income jumps 58 pct in first profit boost since spring of 2008
By Jordan Robertson, APTuesday, January 26, 2010
EMC returns to profit growth, net income up 58 pct
SAN FRANCISCO — EMC Corp. said Tuesday that its net income jumped 58 percent in the latest quarter, the first time since the spring of 2008 that profit has risen at the information-management company.
Revenue also ticked higher, and its 2010 forecast was above Wall Street’s projections. EMC shares rose almost 5 percent in midday trading.
EMC’s results offered the latest signs that corporations’ spending on technology is rebounding from depressed recession levels. The same pattern also appeared this month in the latest numbers from Intel Corp., which reported strong sales of chips for computer servers, and IBM Corp., whose revenue grew for the first time in a year and half.
EMC is the top maker of data-storage machines, and research firm IDC says parts of the storage market that had been declining have started showing “renewed vigor.”
Cost cutting also helped lift EMC’s results. The company announced plans in January of last year to cut 2,400 jobs as part of a restructuring to reduce costs by about $500 million in 2010. EMC says it is substantially done with those job cuts and is on track to reach its cost-savings target. The company has about 43,000 workers.
David Goulden, EMC’s chief financial officer, said in a statement that EMC is in “the best financial and operational shape ever” coming out of the downturn.
EMC, which is based in Hopkinton, Mass., said it earned $426.5 million, or 20 cents per share, in the last three months of 2009, up from $269.9 million, or 13 cents per share, a year earlier.
Excluding one-time items, EMC earned 33 cents per share. That was 3 cents per share higher than the average estimate of analysts polled by Thomson Reuters.
EMC’s net income had fallen in each of the previous five quarters as companies tightened their budgets in the financial crisis.
Revenue was $4.1 billion, an increase of 2 percent. Analysts were expecting flat revenue.
FBR Capital Markets analyst Daniel Ives wrote in a note to clients that EMC’s results were “solid” and that EMC should get a lift from the better-than-expected performance reported Monday by from VMware Inc. EMC owns a majority of VMWare, a maker of software used in corporate data centers.
EMC shares rose 67 cents, or 4 percent, to $17.61.
For 2010, EMC predicts it will earn $1.12 per share, excluding items, on $16.0 billion in revenue. Analysts were predicting $1.11 in profit and revenue of $15.5 billion.
For all of 2009, EMC’s net income fell 12 percent to $1.1 billion and revenue slipped 6 percent to $14.0 billion.
