April 21, 1999
EMC Posts Gains in First Quarter
Of 51% in Profit, 36% in Revenue
By JON G. AUERBACH
Staff Reporter of THE WALL STREET JOURNAL
EMC Corp., a computer-storage equipment maker, continued to grow at
breakneck speed in the first quarter, despite concerns about an industry
slowdown, with net income shooting up 51% and revenue rising 36%.
EMC, Hopkinton, Mass., said net income
grew to $220.7 million, or 41 cents a diluted
share, from net income of $146.1 million, or
28 cents per diluted share, in the year-earlier
period. Revenue grew to $1.13 billion from $828.4 million. It was the
eighth consecutive quarter in which EMC's revenue and net-income
growth have both topped 30%, and the earnings results topped analysts'
expectations by a penny.
The stronger-than-expected financial results helped allay fears among
some investors and analysts that companies are cutting back on storage
spending as they finish preparing their computers for year-2000 computer
retooling. Those concerns were heightened last week when rival Storage
Technology Corp. warned that both sales and net income would be weak
for the quarter.
That bad news, together with an analyst's report suggesting that some
companies might freeze storage spending later in the year, helped lop
about 20% off the value of EMC shares. Tuesday, EMC's shares closed
at $102.1875, up 75 cents, in New York Stock Exchange composite
trading.
In an interview, EMC Chief Executive
Michael C. Ruettgers says the company
sees no sign of a slowdown. He repeated
bullish projections for the rest of the year,
saying the company expects sales and
net-income growth to top 30% in 1999.
Indeed, most analysts say they expect
EMC's growth to continue unabated,
citing the company's technological lead
over competitors and its diversification
into software and services.
"The likelihood of a slowdown in any significant degree is low," said
Steven Milunovich, of Merrill Lynch & Co. He said that Merrill Lynch
research suggested that customers will continue to place orders with EMC
as the year progresses.
Analysts expect EMC's 1999 net income to reach about $1.1 billion, or
$1.99 a fully diluted share, and revenue to rise to about $5.2 billion. In
1998, the company had net income of $793.4 million, or $1.49 per diluted
share, on revenue of $3.97 billion. |
