EMC Software Sales picked up,gaining more profit 2007-01-23
EMC Corp., the world's largest maker of data storage equipment, said Tuesday its quarterly profit more than doubled, helped by a tax gain and strong sales of mid-range storage gear and software.
EMC also gave a 2007 outlook that was roughly in line with market expectations, according to Reuters Estimates, forecasting full-year revenue growth of at least 14 percent and net income-per-share growth of at least 19 percent.
Shares in EMC rose immediately after the results, then fell back when the New York Stock Exchange opened and were off 6 cents in late-morning trading. Before Tuesday, the stock was up 43 percent after hitting a year low of $9.44 in July, pacing broader gains in technology stocks.
"These are stocks that have had a huge run-up from the summer," said Brent Bracelin, an analyst at Pacific Crest Securities who has an "outperform" rating on EMC. "Typically this is the slowest part of the year for EMC, exiting the strongest part of the year, and the stock reflects that."
EMC has been boosting sales of software, which typically has greater profit margins than hardware, and last year acquired security software maker RSA Security Inc. for $2.1 billion. Gross margins in EMC software tend to be above 70 percent compared with less than 40 percent in hardware.
Executives said on a conference call that the company had no plans to make big acquisitions in 2007, but would consider buying smaller companies that it could "tuck in."
EMC said its fourth-quarter net income climbed to $389 million, or 18 cents per share, from $148.3
