Earnings Preview : EMC Corporation (NYSE:EMC) First Quarter 2010
Sunday, April 11, 2022 11:29 AM

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EMC (NYSE:EMC) is scheduled to report their results after the market closes on April20, 2010. EMC expects a faster growth in 2010, with consolidated EMC revenue amounting to $16 billion and non-GAAP EPS of $1.12. The growth is mostly attributable to a very strong product line-up and product cycle.

EMC Corporation and its subsidiaries design, manufacture, market and support a wide range of hardware and software products and provide services for the storage, management, protection and sharing ofelectronic information. These integrated solutions enable organizations tocreate an enterprise information infrastructure, or what EMC calls anE-Infostructure. EMC is the leading supplier of these solutions, which comprise information storage systems, software and services.

EMC showed good progress through 2009 and end of the year with very solid growth in Q4 with revenues of $4.1 billion up 17% from Q3 2009. Non-GAAP EPS of $0.33, up 43% and free cash flow of $793 million, up 6%. Within these results, the EMC infrastructure business had a good Q4 with $3.5 billion in revenue, up 15% sequentially and $0.28 of non-GAAP EPS, up 40% from Q3. On a year-over-year basis, non-GAAP EPS was up 12% on flat revenue, a result that clearly shows the success of our cost translation efforts.  As previously announced VMware also had a strong Q4 contributing $607 million of revenue and was $0.05 of non-GAAP EPS of EMC and showed very good growth from Q3. Given the tough global economic conditions and an IT spending environment down across the board, EMC performed well moving through 2009. All in all, Q4 revenues, Q4 non-GAAP operating margin, Q4 non-GAAP EPS, and Q4 free cash flow results were all records for EMC

Analysts' estimates for Q1 2010 range from a low of $0.14 to a high of $0.29, compared to a consensus estimate of $0.24, with number of estimates being 38 and the co-efficient variance 10.82. As of July 22, 2009, EMC had acquired approximately 94.2% interest in Data Domain, Inc. (Data Domain). In August 2009, EMC acquired FastScale Technology, Inc., a provider of software platforms and solutions for enterprise IT. EMC announced in January that it would Acquire Archer Technologies, a leading Provider of IT Governance Risk and Compliance Software. The combination of EMC's: ownership in VMware, addition of Data Domain's high growth/margin product line, and EMC's strong core product lines should lead to double-digit growth with margin expansion and cash generation abilities above the broader tech group. 2009 finished with improved stability and visibility in IT budgets and should provide a path for continued improvement throughout 2010.

The stock closed at $18.40 on April 8, 2022 and analysts have rated the stock as an Overweight with the price target being $21. Although the latest CIO survey provides some caution with spending expectations pushed to 2H10, EMC's large footprint should increase growth rates in DDUP's product line, which combined with increasing V-Max adoption rates in cloud infrastructures should help drive double-digit top line growth in C10 and drive share price. Other catalysts include: 1) Refreshed product line, 2) Revenue and cost synergies post Data Domain acquisition.

 

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