EMC’s net falls 24 percent but co. boosts guidance on better data-storage spending forecast

EMC net falls but co. sees better storage spending

SAN FRANCISCO — EMC Corp. said Thursday its profit fell 24 percent and sales dropped 5 percent in the latest quarter as corporations spent less on data storage.

But the storage leader said that its clients’ budgets are getting better, and the company raised its 2009 guidance.

EMC’s results are another sign that information technology spending is slowly recovering after a brutal year of cutbacks. Bellwethers like Intel Corp., the No. 1 maker of computer microprocessors, and IBM Corp., the software and technology services powerhouse, also have said they see orders improving amid signs of stability.

Technology spending has been slammed as corporations have hung on to old computers longer to save money. One reason storage has suffered, despite the fact companies are generating more data, is storage equipment is often bought at the same time as computer servers, whose sales have plummeted.

The latest numbers point to those trends easing and corporate spending picking up, but likely more meaningfully in 2010 than this year.

EMC’s net income for the quarter ended Sept. 30 was $298.2 million, or 14 cents per share, versus $393.4 million, or 19 cents per share, in the year-ago period.

Excluding one-time charges and stock-based compensation expenses, earnings were 23 cents per share in the latest quarter. Analysts expected profit of 21 cents per share, according to a poll by Thomson Reuters.

Sales were $3.5 billion, down from $3.7 billion last year. Analysts expected revenue of $3.4 billion.

For 2009, EMC now expects profit of 87 cents per share, excluding one-time items, and $13.9 billion in sales. Analysts forecast profit of 83 cents per share and revenue of $13.8 billion.

EMC is the world’s No. 1 maker of external disk storage — storage that is sold separately from servers. EMC owns more than 20 percent of that market, according to the IDC research firm. When all types of disk storage are considered, including storage built into servers, IBM and Hewlett-Packard Co. are the market leaders. They are the top server makers.

Joe Tucci, EMC’s CEO, said customers are “signaling more comfort spending their IT budgets,” which is why EMC raised its guidance. He expects a “slow but steady recovery” and for information technology spending to start growing again in 2010.

However, some technology companies warn they haven’t seen an improvement.

Xerox Corp. CEO Ursula Burns said Thursday the printer and copier maker has “not seen a meaningful shift towards increased spending on technology.” Xerox reported a 52-percent drop in quarterly profit.

Hardware has been hit hardest by the downturn. Products like software and outsourcing services, which can save companies money in the long run, have fared better.