EMC Corp. (EMC:US), the world’s biggest maker of storage computers, plans to buy back $1 billion in shares this year after reporting first-quarter earnings that missed analysts’ estimates as customers restrained spending.
Net income fell 1.2 percent to $580.1 million, or 26 cents a share, from $586.8 million, or 27 cents, a year earlier, the Hopkinton, Massachusetts-based company said today in a statement. Excluding some costs, profit was 39 cents a share, missing the 40-cent average of analysts’ estimates (EMC:US) compiled by Bloomberg. Sales rose 5.8 percent to $5.39 billion, compared with the $5.42 billion average analyst projection.
EMC customers are trimming storage-computer purchases amid an uncertain economic outlook. International Business Machines Corp. (IBM:US) last week reported first-quarter profit that missed analysts estimates, hurt by a hardware slump. It cited the poor performance of some businesses, such as certain storage products. Sales growth at EMC’s VMWare (VMW:US) Inc. subsidiary has been under pressure as U.S. companies and federal agencies are reducing technology budgets.
Sales for 2013 will probably be $23.5 billion, the company reiterated today.
EMC rose less than 1 percent to $22.53 at 11:40 a.m. in New York. The shares had declined 12 percent this year through yesterday, compared with an 11 percent gain for the Standard & Poor’s 500 Index.
VMware, the software maker that’s majority-owned by EMC, yesterday forecast second-quarter sales that fell short of analysts’ projections as business customers trim spending. The shares dropped 6 percent in extended trading.
EMC Chief Financial Officer David Goulden said in March that the company will boost revenue by at least 8 percent a year and profit excluding certain costs will rise 10 percent annually through 2016 as it increases market share. Sales will exceed $30 billion in 2016, Goulden said at an analyst meeting in New York.
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