EMC: The Storage Sector's Benchmark - TheStreet

EMC: The Storage Sector's Benchmark

EMC will put storage in the spotlight when it reports its fourth-quarter results tomorrow morning.
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HOPKINTON, Mass. (TheStreet) -- Storage may not be sexy, but EMC (EMC) could grab plenty of attention when it reports its fourth-quarter results before the market opens Tuesday.

EMC, which competes with

NetApp

(NTAP) - Get Report

, is the dominant force in the storage market. The firm beat analysts' estimates in its recent

third quarter

, buoyed by cost-cutting efforts and a more confident IT spending environment.

Traditionally seen as one of the more recession-proof parts of the tech sector, storage took a hit during the downturn, and EMC certainly felt the

burn

.

EMC CEO Joseph Tucci

With the U.S. economy picking up, however, investors across the tech sector will be closely monitoring EMC's results.

"EMC is our top pick in the hardware space, given our expectation that the company should see an outsized benefit from the pent-up demand for hardware, particularly storage, as well as from the build-out of next-generation data centers," wrote David Bailey, an analyst at Goldman Sachs, in a recent note.

William Choi, an analyst at Jefferies & Company, echoes these sentiments, adding that EMC is well positioned for 2010.

"EMC is seeing IT spending recover and customer buying patterns becoming more predictable -- EMC should benefit from revenue synergy with its

Data Domain

acquisition and ramp of high-end V-Max product," he wrote, maintaining his $21 price target and buy rating. "We continue to like EMC's diversified customer base, product breadth, and solid execution."

Even if the recovery is underway, though, EMC is not expected to post a massive fourth-quarter growth.

Analysts surveyed by Thomson Reuters expect EMC to report revenue of $4.03 billion and earnings of 30 cents a share, compared to $4.02 billion and 32 cents a share in the prior year's quarter. EMC itself has predicted sales of $4 billion and earnings of 30 cents a share.

This would certainly be in keeping with recent results from tech's big hitters.

IBM

(IBM) - Get Report

saw its storage revenue grow just 1% year-over-year in its recent

fourth-quarter

results -- actually a slump of 4% at constant currency.

EMC shares rose 49 cents, or 2.92%, to $17.25 in extended trading on Monday.

-- Reported by James Rogers in New York

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