EMC beats Street as tech spending recovers

NEW YORK, USA: Data storage company EMC Corp's quarterly results and full-year outlook exceeded Wall Street forecasts, adding to evidence of a recovery in business technology spending.

The world's biggest maker of corporate data storage equipment said fourth-quarter revenue rose 19 percent to $4.9 billion, beating the analysts' average forecast of $4.8 billion, according to Thomson Reuters I/B/E/S.

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EMC's net profit rose to $629 million from $391 million a year earlier.

Excluding items, earnings per share were 42 cents, exceeding Wall Street's average forecast by a penny.

EMC Chief Executive Officer Joe Tucci said overall technology spending appeared to have increased seven percent to eight percent in 2010, much higher than the three percent to five percent growth he had forecast a year ago.

For 2011, the company forecast revenue of $19.6 billion, compared with Wall Street expectations of $19.0 billion, and earnings per share of $1.46 excluding items, a penny higher than analysts' estimates.

EMC shares were up 1.7 percent at $24.23 in afternoon trading. They have risen around 37 percent over the past year on views that the company is one of the top beneficiaries of the increasing popularity of cloud computing, the technology that allows remote access to computing power and data over the Internet. EMC also owns a majority stake in virtualization software company VMware.

Gleacher & Co analyst Brian Marshall said the outlook was particularly impressive, and called EMC the "best-positioned enterprise infrastructure company for the cloud."

EMC's report also comes after strong numbers from Intel Corp and International Business Machines Corp.

"We believe the company's better-than-expected initial guidance range for 2011 on both the top and bottom line is a positive indicator for EMC as well as an improving IT spending environment in the field," FBR Capital Markets analyst Daniel Ives said.

Some analysts said concerns over VMware's margins were holding back the rise in EMC shares.

On Monday, VMware reported solid quarterly results, but said it does not expect operating margins to increase this year as it spends money on new hires and international expansion.