After Its Miss, EMC's Still a Hit
For the period ending in September, EMC reported net income of $626.3 million, or 28 cents per share, on revenues of $5.28 billion. Both EPS and revenue climbed 3% and 6% year over year, respectively. However, both missed analysts' estimates of 42 cents per share on revenue of $5.46 billion, according to FactSet.
Even though this is not a company that misses very often, this quarter's miss was not a surprise. Clearly, it is not immune to the same struggles of weak spending that have affected other tech titans including IBM (IBM) , Microsoft (MSFT) and Cisco (CSCO) . Nonetheless, the company seems to doing pretty well in its core operations as evident by the growth of 3% and 2% in its storage and network storage segments.
Even more impressive was the 5% growth that EMC's high-end storage business produced. But as tends to be the case during tough competitive environments, EMC missed estimates on gross margins as a result of its somewhat lethargic pace in revenue.
If there was one bright side during the quarter, it was with virtualization giant VMware (VMW) , which is majority-owned by EMC. VMware reported numbers that topped analysts' estimates as the company continues to grow despite and acquire business despite the economic slowdown. VMware saw 20% revenue growth as sales reached $1.13 billion and reported net income of 70 cents per share, topping estimates of 63 cents.
EMC benefited greatly from the VMware's performance as the latter makes up 20% of the former's reported revenue. But will this trend continue and will VMware have to continue to exceed expectations to carry EMC?