ALL,ANY THOUGHTS Revenue Growth in the Mid-Twenties. Isn't that a slow down? pLUS, IS emc getting into the server business?. .
EMC says Data General buy to cut Q4 earns slightly
HOPKINTON, Mass., Oct 28 (Reuters) - Data storage giant EMC Corp. (NYSE:EMC - news) said its recently completed acquisition of Data General will lop a couple of pennies per share from fourth-quarter earnings, but add to earnings by a few cents in 2000, President and Chief Executive Michael Ruettgers said on Thursday.
On Oct. 12, EMC completed its $1.1 billion purchase of Data General Corp., of Westborough, Mass. On Oct. 20, EMC reported earnings for its third quarter ended Sept. 30 of $309.5 million, or 29 cents per diluted share, on revenue of $1.33 billion.
Data General operating losses will shave a few pennies from EMC earnings in the fourth quarter, EMC said.
EMC also plans a charge ''in excess of $100 million'' in the fourth quarter related to transaction costs, job cuts and other factors, Ruettgers said.
Analysts have forecast fourth-quarter earnings for EMC of 32 cents a share, according to First Call/Thomson Financial.
Ruettgers, speaking to reporters after a briefing with securities analysts, said combined, the companies would have earned $296 million, or 27 cents a share, on $1.7 billion in revenue for the third quarter.
EMC is on a calendar fiscal year, while Data General's year ended at the end of September. For its full year, Data General had sales of about $1.4 billion, in line with its year-earlier revenues, Ruettgers said.
Ruettgers made the specific Data General financial information available after analysts complained last week when EMC released earnings and declined to give guidance on how Data General would affect EMC results going forward.
During the fourth quarter, the Data General deal will bring EMC $100 million in sales of CLARiiON storage systems and $200 million in sales of AViiON servers, Ruettgers said.
EMC plans to refocus Data General's AViiON server business in 2000, cutting revenues by 25 percent to 30 percent from this year's roughly $1 billion run rate. Ruettgers said the server business will be profitable next year.
Ruettgers said EMC, which was not in the server business before acquiring Data General, has ''no plans to jettison'' the server business.
CLARiiON, meanwhile, will add $600 million in sales to EMC's top line in 2000, Ruettgers said. He said the CLARiiON line has a revenue potential of $1 billion.
All told, Ruettgers said he expects the company to achieve a revenue growth rate in 2000 on a percentage basis in ''the mid-20s.''
The deal, Ruettgers said, boosts EMC's market opportunity in the high-end data storage industry to $50 billion from roughly $35 billion and speeds EMC's growth rate.
''We continue to feel very, very good about this acquisition,'' he said.
Ruettgers reiterated EMC's goal to grow ''organic'' revenues to $10 billion in 2001, from $3.9 billion in 1998. With Data General, he said, the revenue target for 2001 should be $12 billion.
On Thursday, EMC stock rose 3 to 70-7/8 on the New York Stock Exchange
|
