Thursday, April 15, 2010

EMC Corp. (NYSE: EMC): Q1 Earnings Preview 2010

EMC Corp. is scheduled to release its Q12010 earnings before the market open on Wednesday, April 21, 2010. Analysts, on average, expect the company to report earnings of $0.24 per share in the first quarter with estimates ranging from a low of $0.22 per share to a high of $0.27 per share. Revenues for the quarter are estimated to be $3.69 billion. In Q12009, the company reported earnings of $0.22 per share on revenue of $3.15 billion.

EMC Corporation develops, delivers, and supports information infrastructure and virtual infrastructure technologies and solutions.

In the preceding Q12010, the Hopkins, Massachusetts-based company's net income surged 58% to $426.49 million from $269.92 million in the year-ago quarter. On a per-share basis, earnings increased 54% to $0.20 from $0.13. Excluding items, net income was $695.5 million or $0.33 per share, higher than $473.11 million or $0.23 per share in the previous year. Revenues grew 2% to $4.10 billion from $4.02 billion in the comparable quarter. Analysts, on average, expected the company to report earnings of $0.30 per share on revenue of $4.03 billion.

For the fourth quarter, EMC generated record operating cash flow of $1.0 billion and free cash flow of $793 million.

For fiscal-year 2010, the company expects earnings to total $0.78 per share, and adjusted earnings, excluding the impact of restructuring and acquisition-related charges, stock-based compensation expense and intangible asset amortization, to be $1.12 per share. For fiscal 2010, the company anticipates consolidated revenues to be $16.0 billion. Thirty seven analysts currently estimate earnings of $1.11 per share on revenues of $15.45 billion for the year 2010.

The company is confident that it will be able to increase 2010 earnings at a faster rate than the rate at which we will grow it revenues through a combined focus on revenue growth, accelerated investment in R&D and continued cost containment efforts.

It is poised to benefit from strong demand for its storage systems across all product categories. The company has also benefited from a revival in IT spending. Global IT spending will increase by 5.3 per cent this year to touch $3.4 trillion, according to IT research and advisory company Gartner.

EMC benefited from the strategic alliance with Cisco Systems, Microsoft Corp., Dell Inc. and VMware in 2009. Further, new products and cloud computing initiatives drove revenue growth.
It is also likely to have gained market share against rivals during the quarter.

Recently, RBC Capital Markets analyst Amit Daryanani lifted his rating on the stock to "Outperform" from "Sector Perform" and raised his price target by $1 to $22, saying he's bullish about a slew of new products from the data storage company amid strong market demand. Daryanani expects EMC to meet or modestly beat expectations when it reports first-quarter earnings on April 21. He said channel checks indicated that EMC did better than expected in the quarter especially in certain high end products.

In terms of stock performance, EMC shares have gained nearly 8 percent since the beginning of the year.

Full Disclosure: None.
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