This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Storage Wars: Can EMC and NetApp Coexist in 2013?

NEW YORK ( TheStreet) -- The degree to which enterprise IT spending recovers this year remains unclear. However, as companies look to position their business toward the cloud, "Big Data" is projected to take up a meaningful portion of corporate expenses. It's unavoidable.

There will be a host of names such as IBM (IBM) and Hewlett-Packard (HPQ) that are vying for that business. But when it's all said and done, only two will produce market beating performances. Investors want to know if the market can support them both.

EMC (EMC)

Market leader EMC finds itself in an unfamiliar position -- having to prove it deserves to lead. The company has been a solid tech play for quite some time. Its problem has always been its lack of sex appeal. The stock has lost roughly 20% over the past couple of months, which has now placed it in value territory. Investors want to believe again. But EMC must first prove its Q3 was an aberration.

For the period ending in September, EMC reported net income of $626.3 million, or 28 cents a share on revenue of $5.28 billion. EPS and revenue climbed 3% and 6% respectively. However both missed analysts' estimates of 42 cents a share on revenue of $5.46 billion. Considering the tough macro condition, EMC's miss was not much of surprise.

In fact, despite the miss, the company continues to grow its core business with 3% and 2% growth respectively in its storage and network storage segments. Likewise, that its high end storage segment produced 5% growth suggests that despite market headwinds, customers still appreciate EMC's superior technology.

Unfortunately, this was not enough to improve gross margins, which also missed estimates. If there was one bright side during the quarter, it was with virtualization giant VMware (VMW), which is majority-owned by EMC. VMware reported numbers that topped analysts' estimates as the company continues to grow at a 20% rate despite the economic slowdown.

EMC's report could have been much worse. The miss was a disappointment. But sales are still growing -- albeit slower than usual. Management was able to make the best out of a bad situation. The quarter also indicated that that company remains a dominant "Big Data" power. Investors would do well buying at current levels as the stock is poised for 25% surge to $30 at some point this year.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs