EMC beats analyst expectations, despite losses

Sales increase in hardware

EMC has reported stronger-than-expected quarterly earnings, citing its own efforts to cut costs, in addition to the downturn in spending hitting bottom.

The company also forecast full-year revenue above Wall Street expectations as corporate technology budgets stabilised, sending its shares up 2.4 per cent in pre-market trading.

"This marks another quarter of solid execution, and I am proud of the EMC and VMware teams around the world that produced these results," said the company's president Joe Tucci, in a statement.

"When IT markets resume to more normal spending rates, we expect EMC will return to generating double-digit revenue growth."

Tucci also said that the company's involvement in top trends, such as virtualisation and cloud computing, gives EMC "confidence" that its market share will continue to increase this year.

EMC's positive results come in the wake of encouraging statements about IT spending from technology giants such as IBM and Intel, which indicated the worst of the recession was behind them.

"Things are stabilising. Visibility is getting better. That's what Intel, IBM, Dell, everybody else is saying," said Kaushik Roy, an analyst with Wedbush Morgan Securities.

EMC said profit excluding items was 18 cents per share in the second quarter, above the average analyst forecast of 16 cents, according to Reuters Estimates.

Revenue fell 11 per cent to $3.26 billion, beating the $3.20 billion average forecast of analysts.

"While global conditions remain challenging and our full-year view of declining IT spending remains unchanged, EMC's second-quarter financial performance reflects customers' budget stabilisation and improved business predictability," chief financial officer David Goulden said in a statement.

EMC forecast it would report full-year revenue of $13.6 billion, excluding $200 million from its pending acquisition of specialty storage company Data Domain, which was finalised this month after a long bidding war with NetApp. Analysts had expected annual revenue of $13.5 billion.

Net income fell to $205.2 million, or 10 cents per share, from $360.1 million, or 17 cents, a year earlier.

EMC said it now owns 94 per cent of the outstanding shares in Data Domain, which will allow it to close that acquisition on Thursday.