EMC profit rises with increased demand
VMWare sales up 89 percent
Brisk corporate spending on storage devices lifted EMC's second-quarter profit by 20 percent and caused the company to boost - slightly - its estimate for the year. But investors drove down EMC shares, proving that sometimes good isn't good enough.
Net income for the three-month period that ended in June rose to $334m, or 16 cents per share, from $279m or 12 cents in the same quarter last year. The figure beat consensus analyst estimates by a penny, according to Reuters.
Quarterly revenue rose 21 percent to $3.12bn, from $2.57bn, as sales in North America rebounded and demand surged, particularly for midrange products.
Sales in the VMware division grew 89 percent to $298m. EMC plans to sell a 10-percent stake in VMware in an IPO scheduled for late this year. Earlier this month, Intel said it paid $219m to acquire a 2.5-percent stake in VMware.
Sales in North America jumped 20 percent, an improvement over the previous quarter when revenue in the region had slowed. EMC's fastest-growing region remained the Asia Pacific, where revenue increased by 32 percent.
EMC nudged up ever so slightly its forecast for the year, saying profit and revenue for would "exceed" 64 cents and $12.7bn respectively. Previously, the company had said profit and revenue would be "at least" 64 cents and $12.7bn.
And therein was the rub. According to Reuters, the average analyst forecast was for 67 cents on sales of $12.8. EMC shares were trading down 28 cents or 1.4 percent to $19.23 in early afternoon trading.
Over the past 12 months, EMC's shares have gained about 90 percent, and have risen about 24 percent over the past three months.
EMC, which has been on a buying spree over the past few years, plans to continue making acquisitions of smaller companies, but doesn't plan larger ones.
"Right now, we want to avoid a big acquisition this year," Joe Tucci, EMC's CEO told the Wall Street Journal. $reg;