Dykstra: Growth in Store
04/27/07 - 09:31 AM EDT
Lenny Dykstra
In the modern age, everyone needs more storage space, whether it is physical or digital. Today's deep-in-the-money (DITM) call pick is one of the world's leading storage providers: EMC(EMC Quote - Cramer on EMC - Stock Picks).
On Thursday, EMC reported record revenue, $2.98 billion for the first quarter, claiming its 15th consecutive quarter of double-digit revenue growth, yet the stock went down, closing at $15.57, down 1% on the day. Growth was particularly strong in the Asia-Pacific region and Japan, checking in at nearly 30%. With the dollar relatively low in value internationally, growth and increased profits abroad provide enhanced value to earnings reports back home. With accelerating growth abroad, EMC's stock price is in a great position to benefit. VMware, EMC's virtual infrastructure business, saw its net income rise 30% from a year ago to $86.95 million on strong demand, and yesterday VMware filed for an initial public offering of up to $100 million. Many analysts believe that this could be one of the most sought-after IPOS of the year. In February, EMC announced that it would sell off a 10% stake in VMware. At that rate, EMC values VMware as a $1 billion company. With VMware's strong performance this quarter and positive outlook for the future, the IPO should provide a nice increase in value for EMC stock as well.
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