Wednesday, EMC Corp. (EMC), a provider of information infrastructure technologies and solutions, said its second-quarter profit rose year-over-year on strong international sales growth. Further, the company raised its full-year 2008 revenue forecast.
Q2 Results
The Hopkinton, Massachusetts-based company posted second-quarter net income of $377.5 million or $0.18 per share, compared to $334.4 million or $0.16 per share in the prior year quarter.
On a non-GAAP basis, net income for the most recent quarter was $511.7 million or $0.24 per share, compared to $431.2 million or $0.20 per share in the comparable quarter of the previous year.
On average, 23 analysts polled by First Call/Thomson Financial expected the company to report earnings of $0.17 per share for the quarter.
Quarterly revenues amounted to $3.67 billion, higher than the previous year's revenue of $3.12 billion, and swept past the $3.56 billion revenue consensus estimates of twenty two Wall Street analysts.
Joe Tucci, Chairman, President and Chief Executive Officer of EMC, said, "Despite continued economic uncertainty at the macro level, we believe spending on information infrastructure and virtual infrastructure technologies and solutions will continue to grow, driven largely by the need to manage the ever-expanding volume of information efficiently, securely and cost effectively."
Other Metrics
Product sales for the quarter increased to $2.46 billion from $2.22 billion a year-ago, and Services revenue totaled $1.21 billion, up from $902.3 million in the same quarter of last year.
Cost of products sold during the quarter was $1.12 billion, compared to $1.04 billion in the year-earlier quarter, and cost of services rose to $525.8 million from $387.6 million in the second quarter of fiscal 2007. Research and development expenses for the latest quarter ascended to $442.5 million from $384.9 million last year, while Selling, general and administrative expenses grew to $1.14 billion from $924.3 million in the comparable quarter of the previous year.
Operating income for the three months ended June 30, 2008 advanced to $450.4 million from $391.5 million in the prior year quarter.
Geographical Review
On a regional basis, revenue from the United States increased 10% over last year. Revenue from operations outside of the United States grew 27% year over year, representing 48% of total revenue. Revenue from the company's Europe, Middle East & Africa or EMEA region increased 27%, Asia-Pacific & Japan revenue grew 27%, and Latin America revenue rose 24%, each compared with the year-ago quarter.
Segment Analysis
The company's Information Storage business, which includes revenue from storage systems, storage software and related customer and professional services, reached $2.87 billion, an increase of 14%, compared to $2.53 billion in the prior year quarter.
Second-quarter revenues at Content Management and Archiving business rose 18% to $204 million from $173.6 million in the corresponding quarter of the previous year.
For the second quarter of 2008, revenue from RSA, The Security Division of EMC, grew 15% to $144 million from $124.9 million a year earlier, benefiting from strength in areas such as data loss prevention, identity protection & verification, and security information & event management.
VMware (VMW), which is majority-owned by EMC, contributed second-quarter revenues of $453 million, an increase of 52% compared to the year-ago quarter.
Future On Focus
Looking ahead, the company currently expects full-year 2008 non-GAAP earnings of about $0.78 per share, which excludes $79.2 million non-cash charge for IPR&D. Excluding the non-cash charge for IPR&D and the impact of stock-based compensation and intangible asset amortization, non-GAAP earnings for 2008 is projected to be $1.04 per share, with GAAP earnings expected to be $0.74 per share
For 2008, based on current expectations, the company currently expects revenues to exceed $15 billion projected earlier.
Wall Street analysts have a consensus earnings estimate of $0.78 per share, on revenues of $14.97 billion for the year 2008.
Year-To-Date Results
For the six-month period, the company reported net income of $646.3 million or $0.31 per share, compared to $647.0 million or $0.30 per share in the year-earlier period.
Year-to-date revenues improved to $7.14 billion from $6.09 billion in the corresponding period of the previous year.
Peer Performance
Among EMC's rivals, The Armonk, New York-based International Business Machines Corp. (IBM) reported second quarter income from continuing operations of $2.8 billion or $1.98 per share, 22% higher than $2.3 billion or $1.55 per share, reported a year-ago. Net income for the quarter rose 22.3% to $2.76 billion from $2.26 billion last year, and earnings per share increased 27.7% to $1.98 from $1.55 in the prior year quarter. Total revenue for the quarter increased 12.8% to $26.8 billion from $23.8 billion in the same quarter of last year.
For the full year 2008, IBM has reaffirmed its previously issued earnings outlook range of $8.20 - $8.30 per share.
Stock Quotes
EMC is currently trading at $13.60, up $1.14 or 9.15%. During the day, EMC shares touched a high of $13.96 and a low of $12.70. For the past 52-weeks, the stock has been trading between $12.06 and $25.47.
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