EMC lowers revenue outlook despite quarterly jump

Courtesy image

Write a Comment

EMC Corp. of Hopkinton saw a 2-percent jump in quarterly revenue over last year but again lowered its expectations for the rest of the year.

The data storage giant said Wednesday that it took in $6 billion in revenue for its second fiscal quarter. It also returned net earnings of 43 cents per share, which were slightly better than analysts’ expectations but flat with second-quarter results from 2014.

Earlier this year, EMC lowered its outlook for 2015 and said it would cut an unspecified number of jobs. In January, it had forecast revenue of $26.1 billion. With this latest report, EMC lowered that even further, to $25.2 billion.

Most of the company’s revenue growth during the quarter was driven by its non-core businesses, led by its data analytics group, Pivotal. Its revenue rose 18 percent year over year, while VMWare, which specializes in virtualization, saw a 4-percent increase.

Meanwhile, EMC’s core information infrastructure business saw growth of just 1 percent.

In a statement, chairman and CEO Joe Tucci cited more conservative spending by the company’s customers, as well as ongoing geopolitical factors in China and Russia, as drags on revenue growth.

But at the same time, Tucci said market acceptance and rapid growth of the company’s newer products helped during the quarter.

EMC has faced pressure from investors to shake up its operations to better compete in a fast-growing technology landscape. More specifically, earlier this year, hedge fund manager Elliott Management Corp., an investor in the company, called for management to take drastic steps to drive faster growth. Specifically, Elliott wanted EMC to spin off VMware.

EMC bought VMware in 2004 and holds 80 percent of its stock. The subsidiary is growing considerably faster than the parent company.

EMC’s stock, which opened today’s trading at $24.76 a share, rose nearly 3 percent to about $25.68 by 1:30 p.m.