Updated from 2:45 p.m. EST
Stocks of enterprise storage companies moved up strongly Monday, after
preannounced stronger than expected fourth-quarter results.
EMC expects to report total revenue of more than $1.47 billion, and earnings in the range of 1 cent to 2 cents per diluted share, excluding a previously announced restructuring charge. The company previously had predicted that it would lose about 2 cents per share on revenue of about $1.26 billion, a difference of about 17%.
The announcement pushed EMC shares up 56 cents, or 8%, to $7.46 in after hours trading. EMC will formally announce fourth-quarter results before the market opens on Jan. 23.
Joe Tucci, EMC President and CEO, said, "We are encouraged by the strength of these results. Overall, customer spending was better than we anticipated in the fourth quarter."
Earlier in the day, McData said strong sales of two new storage switches boosted fourth-quarter sales well above its previous guidance, and will result in a profitable 2002 on a pro forma basis.
The outlook sent the company's shares up $1.42, or 16.9%, to $9.82 in recent trading. Fellow network storage players
were also rising. Network Appliance closed up 92 cents, or 8.6%, to $11.63, while Brocade finished up 54 cents, or 11.7%, to $5.16.
Broomfield, Colo.-based McData expects fourth-quarter revenue of $104 million to $106 million and earnings of 5 cents to 7 cents a share, using standard accounting. Excluding noncash compensation and amortization charges, the company expects earnings of 6 cents to 8 cents a share in the quarter.
McData had previously predicted it would post fourth-quarter revenue of $84 million to $86 million and pro forma earnings of break-even to 1 cent a share.
The company said it had "clearly gained market share," but attributed some of the gains to seasonal factors. During a meeting at an investment conference following the announcement, Kevin Mammel, McData's director of investment relations, said the company didn't expect sequential growth (in the next quarter). McData will give further guidance on the first quarter when it announces fourth-quarter results after the market closes on Jan. 23.
Analysts polled by Thompson/First Call expect the company to earn 1 cent a share in the first quarter on revenue of $105.3 million.
"McData's preliminary fourth-quarter performance reflected a very strong ramp-up in orders for our recently introduced new products and strong demand across all channels," the company said in a prepared statement. "Revenue for both the Intrepid 6000 Series 140-port Director and the Sphereon 4500 fabric switch was more than double our expectations for the fourth quarter." Both products sold out during the last quarter, and the company is entering the first quarter with a backlog (Mammel didn't say how big) for the switches.
McData displaced rival companies in 130 deals during the last year, further evidence of the company's growing competitive strength, Mammel said.