Updated from 1:52 p.m. EST
top line grew strongly in the fourth fiscal quarter of the year, but weighed down by restructuring and other charges, the storage giant's profit fell 53% from a year ago.
The results were no surprise, since the company preannounced in early January. Quarterly guidance, which could have moved the stock sharply in either direction, was generally in line with expectations; in recent trading, shares were up 41 cents, or 3%, to $13.67.
Software and systems sales both hit the $1 billion mark, bringing total revenue in the quarter to $2.71 billion, up 15% from the same period last year, and a bit above Wall Street's expectations of $2.69 billion.
It was the tenth consecutive quarter of double-digit revenue growth.
The company earned $148.3 million, or 6 cents a share, in the quarter, compared with $320.5 million, or 13 cents a share, in the same period a year ago. Adjusted for charges, earnings rose 27% from last year to $409 million, or 17 cents a share, matching the consensus estimate compiled by Thomson First Call.
By segment, fourth-quarter systems revenue rose 19% to $1.3 billion, while total software revenue, including license and maintenance fees, reached $1 billion for the first time in the company's history. Documentum, a software acquisition that puzzled some investors, continued to perform well, growing revenue by 25%. Professional services, systems maintenance and other services revenue rose 4% to $403 million.
"EMC had double-digit revenue growth across each of its major geographies during the quarter. International revenue growth outpaced revenue growth in North America as EMC continued to benefit from investments made in regions where the company has been traditionally under-represented," EMC said.
For the first quarter ending in March, EMC expects to report earnings of 11 cents a share, including a 3-cent charge that reflects the expense of stock options on sales of $2.57 billion to $2.59 billion. Analysts were looking for 14 cents a share on sales of $2.56 billion on the same basis.
For the current fiscal year, EMC sees earnings of 63 cents to 66 cents a share on sales of $11.1 billion to $11.3 billion excluding options. Analysts were forecasting 65 cents a share on sales of $9.65 billion. The forecast represents a more optimistic stance for the company, boosting expected growth in 2006 to a range of 15% to 17% from an earlier forecast of about 14%, and reflects a generally good spending environment, said CFO Bill Tauber.
The more robust forecast encouraged analyst Brent Bracelin of Pacific Crest Securities, who said he is raising his 2007 revenue and EPS estimates to $12.75 billion and 84 centsfrom $12.32 billion and 82 cents. His company does not have an investment banking relationship with EMC.
Speaking privately, one analyst noted that there appeared to be a bit of softening in the company's sales of switches for storage networks. Although that had little effect on EMC's quarter, he suggested that slower sales of switches, which EMC buys from other companies, could have some impact on the vendors who sold them, including