Briefing.com notes on EMC conference call, courtesy of o_contrair at RB:
From Briefing.com Shrot Stories
EMC Corp. (EMC) 76 1/2: Management was not shy on the conference call this
morning saying that Q4 was the "strongest quarter ever produced." As such,
the storage king is up over $2 in the pre-market after reporting Q4 EPS of
$0.25, $0.02 better than the First Call consensus of $0.23. EMC again posted
solid revenue growth even on a large base as revenues rose 39.7% yoy to
$2.62 bln. Gross margin was an impressive 59.2%, up 150 basis points over
Q3 and 410 basis points in Q499 as a result of a richer product mix (higher
software sales) as well as strong sales of its CLARiiON product. The latter is
an important contributor as the company is focusing on non-OEM sales which
are higher margin. Overall, CLARiiON sales are approaching typical EMC gross
margins. In spite of its strong performance in January heading into the earnings
release, the stock has been weak of late as reports of a slowdown in IT
spending in the first half of this year have weighed on a number of sectors
including storage. Slower IT spending is being caused largely by 1)
macroeconomic issues such as fear of a recession; 2) the absence of large IT
spending budgets from VC-backed or newly public companies; and 3)
decreasing competitive threat from dotcoms allowing traditional brick and
mortars to slow their infrastructure spending. Management made sure to
diffuse this argument both on the conference call and the press release. They
said they "do not see a slowdown in the first half of the year." Also, EMC
argues that speculation over slowing IT spending should not blur the fact that, in
every industry and in every economic mood, information is where competitive
advantage lies. As for guidance, mgmt "remained confident" in the $12 billion
revenue goal earlier stated vs. $8.9 billion in 2000. While not providing specific
EPS guidance, they expect gross margins to remain in the mid to high 50%
level in 2001. Operating margin should be in the 23%-25% range vs 25.4%.
Bottom line: great quarter, but it ain't cheap as forward p/e approaching 80x. --
Robert J. Reid, Briefing.com
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