Data storage giant EMC Corp.
of Hopkinton, Mass., warned that first quarter revenues would fall below expectations, then said it would spend $50 million to buy a Belgian software startup.
EMC briefly announced preliminary results indicating that it would make profits of 18 cents a share for the quarter — roughly $400 million. Not only is that a 29 percent drop from fourth-quarter profits of $563 million, or 25 cents a share, it’s also below 20 cent per-share predictions of analysts polled by First Call/Thomson Financial.
The company said revenue for the three months ending in March would be up 29 percent over last year’s first quarter. That would put it around $2.35 billion, down
almost 10 percent from fourth quarter earnings of $2.6 billion.
The numbers show that EMC failed to remain immune from the first-quarter slowdown in information technology spending that has whacked companies across
several IT sectors.
CEO Joe Tucci said, “Revenues in the first quarter ended up softer than anticipated because of some purchase hesitation from our customers. We found some
customers reluctant to spend budgeted IT money, given the abundance of negative economic news. We are working diligently to show both current and prospective
customers how we can help them through challenging budget constraints.”
Chief financial officer Bill Teuber predicted the company would continue to grow revenue at more than 20 percent for the year, with “modest” annual earnings growth.
Chairman Mike Ruettgers said the IT rebudgeting done across corporate America “has elongated EMC’s sales cycle for the time being.” But he said the spending slowdown “is now mostly complete” and added, “EMC has dealt with adversity before and responds to tough challenges better than most.”
In other news, EMC said it spent less than $50 million in cash to buy FilePool NV, a privately held software company based in Brussels, Belgium.
FilePool is the sixth software acquisition EMC has made since January 2000. The company is adding software tools to complement its data storage hardware
systems to give customers a range of means to secure, file and find data.
In Tuesday morning trading EMC, which over the past year has traded between 25.2 and 104.94, was down 1.9, or 6 percent, at 32.5.
The company plans to announce official first quarter figures on the morning of April 19.