EMC net beats expectations as profit margins swell
HOPKINTON, Mass., Jan 26 (Reuters) - EMC Corp. (NYSE:EMC - news), the leading maker of corporate data storage equipment, on Tuesday reported sharply higher fourth-quarter earnings and revenues, edging ahead of expectations, amid surging growth in software and networked data storage and strong profit margin growth.
EMC said net income for the fourth quarter was a record $256 million, or 48 cents per diluted share, up 54 percent in net terms from the $166 million, or 32 cents per diluted share, recorded in the fourth quarter of 1997. The analysts' consensus for the latest quarter had been 46 cents per share according to First Call, which compiles brokerage estimates.
Revenue grew to a record $1.19 billion, 36 percent higher than in the fourth quarter of 1997. Full-year revenues for 1998 totaled $3.97 billion, 35 percent above 1997's $2.94 billion.
Revenue from EMC's so-called Fibre Channel data storage systems, which link computer systems at faster speeds over greater distances with far greater capacity than traditional data storage, grew 192 percent to $286 million in the quarter. The company said it sees such systems as key to the next wave of growth for EMC.
Its growing portfolio of storage software generated another $164 million in revenues, up 175 percent from last year's fourth quarter, the company said.
EMC, whose products command far higher profit margins than those from rivals like IBM (NYSE:IBM - news) and Storage Technology Corp. (NYSE:STK - news), saw gross margins expand during the fourth quarter to 53.6 percent of revenues from 47.4 percent in the final quarter of 1997.
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