* 3rd-qtr revenue $5.28 bln vs Street view $5.46 bln
* Adjusted profit 40 cents/share vs Street view 42 cents
* Cuts 2012 profit forecast to $1.68 to $1.70 a share
* Shares down nearly 3 pct at mid-morning
By Nicola Leske
Oct 24 Data-storage equipment maker EMC Corp
cut its full-year outlook on Wednesday, echoing peers
also hurt by tight-fisted customers who are putting off spending
amid slow economic growth and ahead of the U.S. presidential
EMC Chief Executive Joe Tucci said confidence in governments
around the world to make decisions on issues such as deficit
reductions and tax policies was at a low point.
"These uncertainties are affecting business confidence, and
this is affecting IT spending rates," Tucci said Wednesday on a
call with analysts.
Other information technology companies such as Xerox
and IBM have also reported slower business, especially
in September, and have said customers are delaying large
purchases and investments while the United States and Europe
remain in economic uncertainly.
Xerox narrowed its 2012 outlook, while IBM stuck to its
targets despite a revenue miss.
EMC, the world's biggest maker of corporate data-storage
equipment, which reported a third-quarter profit and sales below
expectations, said for the full year, it expects earnings per
share of $1.68 to $1.70, and revenue of $21.60 billion to $21.75
Analysts on average were anticipating $1.72 per share on
revenue of $22.03 billion, according to Thomson Reuters I/B/E/S.
EMC said it would meet the lower end of its forecast should
the caution that characterized the end of the third quarter
continue, but it expected to hit the higher end if there is a
seasonal end-of-year budget flush.
In July, EMC reiterated its full-year profit forecast of
$1.70 per share and its revenue outlook of $22 billion.
EMC's shares fell nearly 3 percent to $23.94 in mid-morning
trading on the New York Stock Exchange.
EMC said third-quarter net income attributable to the
company totaled $626.3 million, or 28 cents per share. Excluding
one-time items, it earned 40 cents per share, 2 cents below
analysts' average forecast.
Consolidated revenue rose 6 percent to $5.28 billion,
compared with expectations for $5.46 billion.
"We're disappointed that we did not quite meet our internal
revenue expectations in Q3 and that we interrupted our string of
10 quarters of top-line growth," Tucci said, adding he still had
hopes for some growth in tech spending this year.
Deals were being subjected to more scrutiny, resulting in
more late orders that did not make it into the quarter, Tucci
"That said, to be clear, we still believe that IT spending
in the second half of this year will show some year-on-year
growth, albeit at a slower rate than was experienced in the
first half of this year," Tucci said.
Despite the sales and earnings miss, FBR analyst Daniel Ives
said EMC was a good bet.
"It's a company that has been able to navigate through
choppy seas. EMC is a name more investors will bet on that not,"
he said, adding that investors were focused on the fourth
quarter and 2013.
"If you look at the combination VMware and EMC ... in a slow
growth environment it's a compelling story."
VMware, a publicly traded division of EMC, on
Tuesday posted a third-quarter profit that beat estimates on
stronger-than-expected sales to the U.S. government. But it
forecast fourth-quarter revenue in a range largely below
"EMC owns around 80 percent of VMware and their numbers were
solid, extremely rare in this environment, the implied core EMC
business for Dec. 12 must be incrementally weak," said Brian
Marshall, an analyst at the ISI group.
Nevertheless, he said EMC was the "preferred vehicle for
cloud exposure" because "it had successfully created a business
model ... with impressive revenue growth."
Tucci also made it clear that the company had no intention
of severing ties with Cisco, with whom it has a joint
venture called VCE, and that it was not in the market to buy a
"Some have called into question the viability of
our relationship with Cisco and VCE because of VMware's entrance
into the networking space," Tucci said.
"EMC has no plans to drive deeper into networking by
acquiring a network hardware company," he added.
Recently, speculation had swirled that EMC was interested in
networking equipment maker Juniper Networks.