EMC's Q3 earnings miss targets

But storage giant insists that its strategy is the right best-of-breed approach as sales were up 9 percent from a year ago.
Written by Larry Dignan, Contributor

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.

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.


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