EMC's Q3 earnings miss targets
Storage giant EMC's third quarter earnings missed expectations as some analysts and investors are calling for the company to break up.
EMC reported third quarter earnings of $587 million, or 28 cents a share, on revenue of $6 billion, up 9 percent from a year ago. Non-GAAP earnings were 44 cents a share.
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Wall Street was expecting earnings of 46 cents a share on revenue of $6 billion.
As for the outlook, EMC said that it is expecting to report 2014 revenue of $24.5 billion with non-GAAP earnings of $1.90 a share. That outlook is roughly in line with expectations, but the non-GAAP earnings projection from EMC is a penny light of estimates.
Although EMC could be seen as a break-up candidate given its three businesses — EMC, VMware and Pivotal — executives reiterated that the company's strategy is the right one for big data and cloud deployments. EMC CEO Joe Tucci said:
Our strategically aligned businesses — EMC Information Infrastructure, VMware, Pivotal and RSA — are well positioned to capitalize on the massive IT market opportunity in front of us.
Among the key data points:
- EMC's information infrastructure unit saw revenue growth 6 percent from a year ago. Emerging storage, which includes solid state systems, saw revenue jump 47 percent.
- VMware's sales were up 17 percent from a year ago.
- Pivotal, EMC's big data play, delivered sales growth of 24 percent.
- North America accounted for 55 percent of revenue.
- EMEA revenue growth in the third quarter was 15 percent with Asia Pacific up 4 percent and Latin America up 1 percent.
- Pivotal lost $52 million in the quarter, but the rest of EMC's businesses delivered strong profits.
