UPDATE: EMC Sees Revenue Up 65% Over 4 Years, Lifted By Clouds
(Adds executive and analyst comments) . . By Shara Tibken . Of DOW JONES NEWSWIRES .
NEW YORK (Dow Jones)--EMC Corp. (EMC) expects its revenue to grow by 65%, or more than $10 billion, over the next four years as the data-storage provider benefits from soaring demand for efficient ways to store mounting troves of files.
The Hopkinton, Mass., company has been posting strong results as customers bulk up their data centers and acquisitions help it expand into fast-growing areas of the storage market. EMC has targeted virtualization and cloud computing as key focus areas for the next few years, confident it can take market share from rivals and grow faster than its addressable market.
EMC executives said there is no sign of growth slowing. Chief Financial Officer David Goulden said EMC's revenue could reach at least $28 billion in 2014, posting a compound annual growth rate of at least 13% from 2010 to 2014. Revenue was $17 billion in 2010.
"We are at an inflection point" in the information technology industry, Goulden said at an analyst event Tuesday. "There are going to be winners and losers in this next battle, and we're confident we're going to be a winner."
He said the average per-share earnings growth from 2010 to 2014 should exceed revenue growth.
EMC shares, up 55% over the past 12 months, recently edged up 11 cents to $26.11.
"They have a lot of different fires brewing right now," FBR Capital Markets analyst Daniel Ives said. "They have a very diversified product portfolio, and they've put themselves in a very good position to capitalize on an improving spending environment and on the overall paradigm shift in terms of cloud computing."
The storage industry has been in the spotlight since Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL) in August launched a bidding war for high-end storage provider 3Par. Tech giants have been on a buying spree in recent months, building their exposure to the sector.
In addition, data storage is considered a linchpin of cloud computing--a buzzword for an increasingly popular technology that enables companies to access computer servers and storage over the Internet or internal networks, allowing them to lower data costs and move content more nimbly.
Much of EMC's exposure to cloud computing comes through its majority ownership of virtualization software maker VMware Inc. (VWM), and EMC Chairman and Chief Executive Joe Tucci expressed confidence that EMC has the right "credentials" to help its customers adopt cloud computing.
"We did not invent the cloud, but we definitely have recognized the opportunity early," Tucci said. "No segment of the [information-technology] industry...will be immune to this disruption."
Tucci said he views vSphere, VMware's virtualization platform, as the industry's cloud operating system. He also said EMC's strength in information storage, protection, security, management and intelligence positions it well to help customers implement hybrid clouds, a combination of public and private clouds.
This year, IT spending will likely be at the higher end of EMC's projected range of 5% to 7% growth, Tucci said. He reiterated EMC's revenue and earnings projections for 2011 and added that companies are willing to spend on technology, but IT needs to transform from being too costly, complex, inefficient and inflexible.
Goulden said EMC's total addressable market is expected to grow an average of 10% a year from 2010 to 2014. By comparison, the average annual revenue growth rate from 2007 to 2010 was 9%, while EMC's addressable market grew 6%, he said.
EMC also is targeting $4 billion in free cash flow in 2011, up from a record $3.4 billion in 2010.
Last month, EMC reported all-time record quarterly and full-year revenue and profits. VMware, meanwhile, said its fourth-quarter profit more than doubled and revenue surged, easily beating its own bullish estimates.
"We're in a great position in storage for the cloud," Tucci said. "We're focusing our whole strategy on how to become the companies that take our customers on this journey to benefit from IT-as-a-service." .
-By Shara Tibken, Dow Jones Newswires; 212-416-2189; shara.tibken@dowjones.com .
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(END) Dow Jones Newswires
February 08, 2011 13:46 ET (18:46 GMT) |
