Jan 26, 2010 (09:01 AM EST)
EMC Reports 58% Jump In Income
Read the Original Article at InformationWeek
EMC broke a string of lackluster quarters with a resounding turnaround fourth quarter, reporting a 58% net income jump of $427 million, surprising analysts and even beating its own predictions.
The storage company said its consolidated revenue for the quarter hit $4.1 billion, representing an increase of 17% over the previous quarter and 2% year-over-year. The figure was $100 million more than the earlier outlook provided by the firm.
"EMC is reaping the benefits of preparing for the worst," said TRB senior analyst Allan Krans in an e-mail. "EMC was quick to react during the current economic downturn, and began rationalizing its expense structuring before the recession impacted its financials. After completing its restructuring initiatives early in 2009, EMC was able to preserve profitability during the recession and is now driving profit growth as revenue begins to recover."
In announcing its fourth-quarter report, EMC said it expanded its gross and operating margins on a sequential basis and generated operating cash flow of $1 billion while achieving quarterly free cash flow of $793 million. The company noted that it ended the fourth quarter with $9.4 billion in cash and investments.
Joe Tucci, EMC chairman and CEO, said the company "is well positioned to lead the industry's newest and potentially largest wave of IT, which we and others refer to as cloud computing." He noted that EMC is pushing its virtualized data centers in the effort to deliver IT as a service. EMC has formed an important alliance with Cisco Systems through EMC's ownership position in VMware to drive into data centers on the way to spreading cloud computing.
Krans indicated that EMC has been successfully implementing its partnerships with Cisco, VMware, and Ionix in its drive to expand its business beyond its traditional storage lines.
David Goulden, EMC's CFO, said the firm is emerging from the recession in "the best financial and operational shape ever."
EMC stock rose more than 4% in early trading Tuesday.