EMC reported a better-than-expected fourth quarter of fiscal 2013.
Earnings beat the Zacks Consensus Estimate by $0.02, while revenues
were also slightly better than the consensus mark. However, the
company's weak first-quarter and 2014 outlook are disappointing. We
believe that increasing competition and a sluggish IT spending
outlook for the next couple of years will continue to keep top-line
and profitability under pressure in the near term. Nevertheless, we
believe that EMC is well positioned to benefit from incremental
data center hardware spending, going forward. EMC's vast product
portfolio, which has products suitable for any kind of budget, will
boost its market share, going ahead. Additionally, aggressive share
repurchase will drive earnings, going forward. Thus, we remain
Neutral and set a price target of $26.00.
Incorporated in 1979 and headquartered in Hopkinton, Mass., EMC
Corp. (EMC) offers storage and security solutions for every layer
of IT architecture. The company's evolving product portfolio is
focused on providing the infrastructure for Cloud Computing and Big
Data and building trust into that infrastructure.
EMC operates through two segments EMC Information Infrastructure
business (78.8% of 2012 revenues) and VMware Virtual Infrastructure
business (21.2% of 2012 revenues). The EMC Information
Infrastructure business consists of three business units, namely,
the Information Storage business, the RSA Information Security
Segment and the Information Intelligence Group Segment.
The Information Storage business helps to store and protect
information and derives revenues from storage systems, storage
software and related customers. The information storage systems can
be deployed in storage area network (SAN), networked attached
storage (NAS), unified storage combining NAS and SAN, content
addressed storage (CAS) and direct attached storage (DAS)
RSA Information Security business is the security division of
the company that offers solutions in security management and
compliance, including enterprise governance, risk and compliance,
data loss prevention, security information management, continuous
network monitoring and fraud protection. The segment's products
also encompass identity management and protection, which include
identity assurance and access control, encryption and key
The Information Intelligence Group provides software, solutions
and services that help customers to collaborate, manage, access,
distribute and control information securely from anywhere, at any
time and from any device.
VMware Virtual Infrastructure business is represented by EMC's
majority equity stake (80.0%) in VMware. The company is a leading
provider of virtualization and virtualization-based cloud
infrastructure solutions. The solutions offered by VMware help
reduce costs and enhance operational efficiencies, facilitating
access to cloud computing, business continuity, software lifecycle
management and end-user computing device management.
EMC reported revenues of $21.71 billion in fiscal 2012. The
company's product sales, comprising systems and software licenses,
contributed 60.0% of the 2012 revenues, while Services revenues,
comprising software maintenance, installation services,
professional services, hardware maintenance and training services
accounted for the remaining 40.0%.
Successive acquisitions have helped the company build a strong
portfolio of products, which provide tough competition to large
software vendors. EMC competes with large companies such as IBM,
NetApp, Hewlett-Packard and Hitachi Data Systems.
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