EMC Profits Fall 43%

Storage giant EMC, which had enjoyed double-digit profits for 21 quarters up until this year, reported July 23 that it lost ground in the second quarter of 2009 as its profit fell 43 percent from a year ago.

The company's virtualization subsidiary, VMware, reported a 36 percent drop in profits July 22. However, executives from both companies were optimistic, saying they believe a return to higher numbers may not be far away.

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EMC's earnings dropped to $205.2 million, or 10 cents per share, from $360.1 million, or 17 cents a share, in the second quarter of 2008. Overall income was down 11 percent to $3.26 billion.

Revenue from VMware added $455 million to EMC's total. As VMware execs had said a day before, EMC CEO Joe Tucci said July 23 he believes that market stabilization may be nearer than many people think.

"When IT markets resume to more normal spending rates, we expect EMC will return to generating double-digit revenue growth," Tucci told a conference call of analysts and journalists.

But in offering some guidance on the company's prospects, EMC signaled that the tech market is at least returning to more predictable conditions.

"While global conditions remain challenging and our full-year view of declining IT spending remains unchanged, EMC's second-quarter financial performance reflects customers' budget stabilization and improved business predictability," EMC Chief Financial Officer David Goulden said during the conference call.

"We now have better visibility and more confidence in the second half of 2009," Goulden said.

In its 2009 guidance, EMC forecast revenue of $13.8 billion, including its pending $2.2 billion acquisition of Data Domain. Thomson Reuters analysts projected 78 cents per share and $13.49 billion in revenue, Reuters reported.