EMC slides as federal spending slips
Shares fall more than 3 percent Tuesday after the storage giant blows Wall Street's top- and bottom-line estimates.
By James Rogers
NEW YORK (TheStreet) -- EMC (EMC) shares slipped before market open on Tuesday after the storage giant's third-quarter results missed Wall Street's top- and bottom-line estimates amid a decline in U.S. federal spending.
The Hopkinton, Mass., firm reported revenue of $5.5 billion, an increase of 5% on the prior year's quarter, but below the $5.8 billion consensus estimate.
Excluding items, EMC earned 40 cents a share, flat compared to the same period last year. Analysts surveyed by Yahoo Finance had predicted earnings of 45 cents a share.
Investors responded negatively to the numbers, pushing EMC's shares down 3.5% to $24.35 in morning trading.
"While our financial results for the third quarter were impacted by a decline in U.S. federal spending and a backend-loaded quarter, we achieved almost all of our strategic and operational goals," said EMC chief operating officer David Goulden in a statement. "We were pleased to see storage demand accelerate in the third quarter excluding U.S. federal, and we think this is an encouraging sign for the storage market overall. Going forward, we remain confident EMC will continue to grow and gain market share."
Within EMC's information infrastructure business, revenue from emerging storage, which includes the Isilon NAS (Network Attached Storage) product and the company's Atmos object-based storage offering, grew 66% compared to the prior year's quarter.
After market close on Monday, EMC's VMware (VMW) subsidiary reported double-digit year-over-year revenue growth. The virtualization trailblazer also beat Wall Street's bottom-line estimate. VMware shares were up 10.61% to $91.42 in premarket trading.
EMC's guidance came in weaker than expected. For fiscal 2013, the company expects revenue of $23.25 billion and earnings of $1.80 a share, below Wall Street's estimate of $23.44 billion and $1.86 a share.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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