News

EMC's Profit Doubles

Profits more than doubled in the fourth quarter for information-management vendor EMC Corp. and beat the estimates of Wall Street analysts Tuesday.

In the last three months of 2006, EMC earned $389 million, 18 cents per share, on revenue of $3.21 billion. In the comparable quarter last year, the Hopkinton, Mass.-based company earned $148 million, or 6 cents per share, on revenue of $2.71 billion.

The comparison is skewed somewhat because last year's results were dragged down $274 million by restructuring charges and an acquisition. But they also were inflated by $69 million because EMC was not expensing stock options at the time, as it does now.

This quarter, the numbers were boosted 7 cents per share by tax benefits but trimmed 6 cents per share by a restructuring charge. Without one-time items, EMC would have earned 17 cents per share, still higher than the 16 cents forecast by analysts surveyed by Thomson Financial. EMC also exceeded the revenue forecast of $3.17 billion.

EMC shares fell 15 cents to $13.32 in morning trading on the New York Stock Exchange.

EMC has been on an acquisition tear in recent years, expanding from its original profile as a maker of data-storage machines into a seller of hardware and software that help businesses manage information flow. The transformation was highlighted in 2006 by the $2.1 billion buyout of RSA Security Inc.

For now, revenue in the original storage segment still accounts for most of EMC's business. Storage revenue grew 9 percent to $2.67 billion. The smaller EMC divisions grew faster, with the VMWare computing "virtualization" unit doubling to $232 million.

EMC executives said they expect 2007 revenue to be at least $12.7 billion, which would amount to 14 percent growth, with earnings of at least 64 cents per share. Analysts had been expecting 63 cents per share and revenue just under $12.7 billion. Bank of America Securities analyst Keith Bachman called the guidance "solid if unspectacular."

For all of 2006, EMC earned $1.22 billion, or 54 cents per share, with revenue of $11.2 billion. Each figure beat the prior year's numbers, when EMC earned $1.13 billion, or 47 cents per share, on revenue of $9.66 billion. However, EMC noted that its 2005 profit would have been 40 cents per share if the company had been expensing stock options then, as it did in 2006.

EMC's chairman and chief executive, Joe Tucci, said 2006 was "somewhat disappointing" because of choppy execution that led to two weak quarters followed by two strong ones. He pledged improvement, saying "2007 will be EMC's year." He also said EMC had no plans for more big acquisitions this year.

Featured

  • The 2021 Microsoft Product Roadmap

    From Windows 10X to the next generation of Microsoft's application server products, here are the product milestones coming down the pipeline in 2021.

  • After High-Profile Attacks, Biden Calls for Better Software Security

    Recent high-profile security attacks have prompted the Biden administration to issue an executive order aiming to tighten software security practices across the board.

  • With Hybrid Networks on Rise, Microsoft Touts Zero Trust Security

    Hybrid networks, which combine use of cloud services with on-premises software, require a "zero trust" security approach, Microsoft said this week.

  • Feds Advise Orgs on How To Block Ransomware Amid Colonial Pipeline Attack

    A recent ransomware attack on a U.S. fuel pipeline company has put a spotlight on how "critical infrastructure" organizations can prevent similar attacks.