Profits fall 5 percent at EMC
EMC Corp. today said its second-quarter profit dropped nearly 5 percent, a result that the data-storage provider warned about four days ago when it said it would fail to meet its quarterly financial goals due to inventory troubles for a key new product.
Hopkinton-based EMC said net income for the April-June period was $279.1 million compared with $293.4 million in last year's second quarter. The profits in both quarters worked out 12 cents per share.
Revenue rose 10 percent to $2.6 billion from $2.3 billion a year ago. The latest figure was just shy of the forecast of $2.7 billion that EMC had made before the company said Monday that it would miss that target.
Monday's pre-earnings announcement sent the company's shares down 7 percent. Before the announcement, EMC had expected to post a per-share profit of 13 cents per share, a penny higher than the result announced today.
On Friday, EMC's stock slipped 8 cents to $9.90 in premarket trading.
The most recent quarter marked the 12th straight period in which EMC has posted double-digit revenue growth. However, today's result also marked a slowdown in profit growth at EMC, which posted a 30 percent increase in profits in 2005 compared with 2004.
The most recent quarter includes an expense of 2 cents per share to account for employee stock option expenses, which EMC began to count against its earnings this year to comply with a new accounting rule. The most recent quarter also includes a charge of 2 cents per share for amortization expenses, and a penny per share tax benefit.
EMC, the largest provider of data storage systems for corporate clients, said it was hurt by a shortage of inventory to meet greater-than-expected demand late in the quarter for its newest Symmetrix DMX-3 storage system. Orders for an earlier version, the DMX-2, were consequently fewer than expected.
"While our execution was not up to our own high standards, our business and customer demand for our products and solutions remain strong. The compelling evidence is the 14 percent year-over-year growth in new bookings," said Joe Tucci, EMC's chief executive. (AP)
