EMC Revises Outlook; Execs Dump Shares

Data storage software and device maker EMC (NYSE: EMC) gave investors a reason for pause Tuesday when it confirmed in an SEC filing that it would absorb a $100 million restructuring charge in its fourth quarter that will trim earnings by $0.05 a share.

The stock closed off $0.20 a share in the regular trading session before tumbling another $0.49, or 3 percent, to $16.40 in after-hours trading.

The charge and expected hit to EMC’s fourth-quarter results was not disclosed last month when it reported better-than-expected sales ($3.52 billion) and earnings ($0.23 a share) in its third quarter.

Also, the company divulged that a trio of EMC executives, including director John Egan, sold almost 2 million shares of stock worth close to $5.1 million in the quarter.

In its surprising 8-K filing, EMC revised its consolidate GAAP diluted earnings in the fourth quarter to $0.16 a share—down from its previous target of $0.21 a share.

For the fiscal year, its now expecting a profit of $0.50 a share, rather than the $0.55 a share it had previously forecast.

“This plan is part of EMC’s ongoing cost transformation program and is intended to facilitate EMC’s international expansion, reduce costs, improve the efficiency and effectiveness of the company’s organizational structure, further strengthen the company’s operations and position the company for improved business agility in the future,” the company said in the filing, adding that it expects the restructuring of its international subsidiaries to be completed in 2010.

EMC expects its total sales for the fourth quarter to check in at $4 billion—in line with analysts’ estimates—and $13.9 billion for the fiscal year.

Earlier this month, Barclays Capital analyst Ben Reitzes upped his 2010 profit forecasts from $0.99 a share to $1.05 a share and upped his 12-month price target to $21 a share.

“Our checks indicate that EMC is benefiting from a new product cycle and stronger storage demand in general,” he wrote in the accompanying research report last month.

EMC is the parent company of virtualization software leader VMware (NYSE: VMW).