EMC Corporation (EMC): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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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) systems.

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 management.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: CAS , EMC , SAN



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