EMC Corporation (NYSE: EMC) would publish its third-quarter 2013 financial results on October 22, 2013. The company is also expected to hold a conference call for investors on the same day at 8:30 a.m. ET on to review the results.
EMC continues to act as the leader in storage technology, offering solutions from small to large enterprise businesses, and remains positioned for long-term revenue growth of 10 percent plus and EPS growth in the high teens.
Wall Street expects EMC to earn 45 cents a share, up 12.5 percent from 40 cents a share in the same quarter last year. EMC's earnings have managed to top Street view only once in the past four quarters while missing on two occasions.
Over the past 90 days, the consensus estimate has decreased from 46 cents while two analysts have cut their earnings view in the past 30 days.
Quarterly revenues are expected at $5.80 billion, according to analysts polled by Thomson Reuters. The consensus estimate implies growth of 9.8 percent from $5.28 billion revenue generated in the year-ago period.
EMC is the market leader (about 30 percent share) in storage and the company's revenue projections are primarily linked to IT spending trends. Investors may look for comments on IT spending especially in EMEA and Federal, implications from public cloud and further updates on the Pivotal Initiative.
The Pivotal Initiative is looking to build a complete and integrated Big Data ecosystem that features the assets of both EMC and its majority owned subsidiary VMware, Inc. (NYSE:VMW), which will report its quarterly numbers on Oct.21.
EMC's performance is tied to the overall decline or rise of the storage hardware, software and services markets. EMC increased its lead in the external disk storage systems market with 31.3 percent revenue share in the second quarter, according to IDC. EMC continued to maintain its leadership in the total open networked storage market with 34.1 percent revenue share, followed by NetApp with 15.2 percent rev! enue share.
In the Open SAN market that slid 0.6 percent, EMC was the leading vendor with 29.7 percent revenue share, followed by IBM with 15 percent market share and HP with 13 percent.
The market may be keen on knowing how the XtremIO suite of flash products (PCIe cards, flash software, and all-flash arrays) based on its acquisition of XtremIO last year are faring.
Investors would also look for some color on the recent VNX refresh and traction with the customers. The performance gains of the new VNX are impressive and leverage several technological advances (multi-core CPUs, virtualization and flash).
"We expect the raw performance and flexibility attributes of VNX to drive a significant refresh / upgrade cycle for multiple quarters. After several Qs of slow VNX growth, we expect the refreshed VNX to drive a significant reacceleration in upcoming quarters," Deutsche Bank analyst Chris Whitmore wrote in a note to clients.
The Street could be focused on the company's outlook for the full year as easier comparisons and product refreshes may benefit earnings. EMC sees GAAP earnings of $1.37 for 2013 and non-GAAP earnings $1.85 a share for 2013. Consolidated revenues are expected to be $23.5 billion for 2013. Analysts expect earnings of $1.86 a share on revenue of $23.44 billion.
Investors might look for an update on returning cash to shareholders. EMC has recently increased its authorization to repurchase common stock from $1 billion in 2013 to $6 billion over the three-year period ending December 31, 2015.
It also initiated a quarterly cash dividend of 10 cents a share. Since, the dividend yield is only 1 percent and the payout ratio is 16 percent, EMC can easily raise it for years to come.
EMC generated year-to-date operating cash flow of $2.9 billion and free cash flow of $2.3 billion and ended the second quarter with $17.6 billion in cash and investments. EMC expects to repurchase an aggregate of $3.5 billion of the company's common stock in 2013 and th! e first h! alf of 2014.
For the second quarter, EMC reported that its second-quarter net income attributable to company increased to $701 million, or 32 cents a share, from $650 million, or 29 cents a share, last year. Adjusted net income was 42 cents a share. Revenues increased to $5.61 billion from $5.31 billion last year.
EMC shares, which currently trade at 12 times its 2014 consensus EPS estimate, traded between $21.45 and $27.34 during the past 52-weeks.
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