Storage giant EMC ( EMC) beat analysts' second-quarter revenue and profit estimates amid signs that IT spending is starting to stabilize. The Hopkinton, Mass.-based firm reported revenue of $3.26 billion, down 11% on the same period last year, and just above Wall Street's forecast of $3.2 billion. Sales, however, increased 3.4% sequentially and EMC's VMware ( VMW) subsidiary contributed $455 million to second-quarter revenue. EMC's profit also came in above analysts' expectations. On a non-GAAP basis, the company posted earnings of 18 cents a share on net income of $358.9 million, compared with 24 cents a share and $494.4 million in the same period last year. Analysts polled by Thomson Reuters had expected earnings of 16 cents a share. The profit and revenue beat pushed EMC's shares up 89 cents, or 6.18%, to $15.30 in pre-market trading. On a GAAP basis, EMC earned 10 cents a share on net income of $205.2 million, down from 17 cents a share and $360.1 million in the prior year's quarter. EMC, which recently beat rival NetApp ( NTAP) in the battle to acquire de-duplication specialist Data Domain ( DDUP), also issued 2009 guidance. The storage specialist expects revenue of $13.8 billion, just above analysts' forecast of $13.5 billion. Third-quarter sales will increase 2% to 3% sequentially excluding revenue from Data Domain, according to EMC. "This marks another quarter of solid execution," said Joe Tucci, the EMC CEO, in a statement. "When IT markets resume to normal spending rates, we expect EMC will return to generating double-digit growth."
EMC CFO David Goulden added that the company is already seeing some signs that the economy is slowly getting back on its feet. "While global conditions remain challenging and our full-year view of declining IT spending remains unchanged, EMC's second-quarter financial performance reflects customers' budget stabilization and improved business predictability," he said. Like rival IBM ( IBM), EMC has thrown its weight behind cloud computing, although EMC also highlighted virtualized desktops, backup, recovery and archiving as big priorities for the company during a conference call early Thursday. "We have invested about $40 million in our cloud infrastructure this year," said Goulden, adding that EMC exited the second quarter with $10 billion in cash and investments. EMC also announced the completion of its tender offer for Data Domain's common stock Thursday. The software specialist achieved second-quarter revenue of $86 million, up 40% on the prior year, according to EMC.