UPDATE 5-EMC forecast ahead of Street view; stock rises

* Sees 2009 revenue at $13.6 bln excluding Data Domain

* Sees 2009 EPS ex-items 82 cents; Street view 78 cents

* Q2 EPS ex-items 18 cents; Street view 16 cents

* Shares rise 4 percent (Adds that EMC closed Data Domain deal; updates shares)

By Jim Finkle

BOSTON, July 23 (Reuters) - EMC Corp (EMC.N), the top maker of corporate data storage equipment, forecast full-year earnings above Wall Street expectations as corporate technology budgets stabilize, sending its shares up 4 percent.

The company also reported a stronger-than-expected quarterly profit on Thursday, citing cost-cutting in addition to the downturn in spending hitting bottom.

EMC executives said technology budgets firmed during the second quarter, giving the storage maker increased confidence in its ability to make earnings projections.

"When you talk to customers, customers are saying, 'I do have a budget now,'" said Chief Executive Joe Tucci. "Q2 is going to be the bottom."

The comments come in the wake of similarly encouraging statements from technology giants such as International Business Machines Corp (IBM.N) and Intel Corp (INTC.O), which indicated the worst of the recession was behind them.

"Things are stabilizing. Visibility is getting better. That's what Intel, IBM, Dell, everybody else is saying," said Kaushik Roy, an analyst with Wedbush Morgan Securities.

EMC said profit excluding items was 18 cents per share in the second quarter, above analysts' average forecast of 16 cents according to Reuters Estimates.

Revenue fell 11 percent to $3.26 billion, beating the $3.20 billion average forecast of analysts. EMC projected third-quarter revenue, excluding sales from its acquisition of Data Domain Inc DDUP.O, of $3.32 billion to $3.36 billion, shy of the average analyst forecast of $3.37 billion.

It forecast full-year revenue of $13.6 billion, excluding $200 million from Data Domain. Analysts had expected $13.5 billion.

It projected a full-year profit of 82 cents per share excluding items, ahead of the Street view of 78 cents. It said the Data Domain acquisition would not impact profit.

It was the first time this year that EMC had issued a full-year forecast. In January it broke with its usual policy of issuing such guidance, saying it did not have enough visibility into corporate spending trends.

"This underscores the company's confidence in the improving business trends going forward," said Edward Jones analyst Bill Kreher.

VMWARE 'TOTALLY STRATEGIC'

Second-quarter net income fell to $205.2 million, or 10 cents per share, from $360.1 million, or 17 cents, a year earlier. Profit was buoyed by EMC's majority stake in VMware Inc (VMW.N), which added 4 cents a share to profit, excluding items.

VMware's stock rose 4.9 percent to $32.77 in what analysts called a relief rally after the business software company's quarterly results came in slightly better than expected on Wednesday. [ID:nN22336935]

EMC Chief Financial Officer David Goulden said the company has "zero plans" to sell or spin off VMware. "It is a totally strategic asset," he said in an interview.

Over the past year, rumors have cropped up several times that EMC might sell the software maker to Cisco Systems Inc (CSCO.O) or spin it off to shareholders.

Hopkinton, Massachusetts-based EMC said late on Thursday that it had closed its acquisition of Data Domain.

EMC will continue to pursue other acquisitions, focusing on companies that it can quickly integrate and which will bring it revenue growth, Goulden said. It is looking at specialized services firms, overseas companies and security businesses, he added.

The company will have about $8 billion in cash after the acquisition, including $2 billion in the United States, $3.7 billion overseas and $2.3 billion in VMware's coffers.

Goulden said he needs about $1 billion cash in the United States to comfortably run the business.

EMC shares rose 59 cents, or 4 percent, to close at $15.00 in heavy trading on the New York Stock Exchange. (Reporting by Jim Finkle, Editing by Maureen Bavdek, John Wallace and Richard Chang)