EMC sees expenses rise again
More cutbacks to come, despite record revenue
EMC continued its run of financial good form in the fourth quarter, and rode a tax payday and higher system sales to beat its own and most analysts' expectations.
The storage monster's profits were buoyed by the $76.7m tax gain to a GAAP net income of $389m, or $0.18 per share. Revenue for Q4 hit $3.22bn. A year earlier, revenue was 18.6 per cent lower and profits were $148.3m, or $0.06 per share.
EMC took a hit to its operating income though, which fell to $298.3m from $420.7m a year earlier. The firm incurred one-off charges from slashing 1,700 jobs this quarter, which with restructuring shaved $0.06 from the earnings per share.
In fact, EMC recorded a drop in operating income for every quarter in 2006 compared to the corresponding periods a year ago. Rising expenses led CEO Joe Tucci to allude to more cutbacks in 2007 once the integration of new security division RSA is further along.
The firm plans to become "where information lives" by buying a bunch of software firms is yet to convince some, with RSA's $2.1bn ticket price still looking high to many on revenues of $114m, albeit up 26 per cent.
The market for storage hardware continues to be the main justification for Tucci's claim the firm is on the "short list of the world's elite information technology suppliers". The midrange Clariion series grew sales by 17.9 per cent over the year, contrasting with higher-end Symmetrix system's weedy 3.6 per cent increase.
The fiscal year clocked in at just under $11.2bn, with income reaching $1.22bn, or $0.54 per share on a GAAP basis. EMC said it expects a 14 per cent increase in sales in 2007 to at least $12.7bn.
EMC's statement and full results are here. ®