World data storage market leader EMC said April 23 in reporting its Q1 2014 earnings that its first-quarter revenue increased a modest 2 percent, but also that its profits slipped a worrisome 32 percent.
The Hopkinton, Mass.-based company charted $5.48 billion in overall sales that, with all the bills paid, resulted in a profit of $392 million (19 cents a share). That number was way down from $580 million (26 cents a share), from the like 2013 quarter.
With this in mind, EMC lowered its earnings guidance for 2014 by 5 cents to $1.90 a share. It now has on the books a new projection for full-year revenue of $24.58 billion—not a very large change from its prior forecast of $24.5 billion.
The stock price was down 3.2 percent in after-hours trading at $25.91.
EMC, which has topped the storage hardware marketshare charts for about the last 10 years ahead of NetApp, Dell and IBM, is seeing its influence marginalized more and more by enterprise cloud storage services such as Amazon Web Services, Microsoft, Hewlett-Packard, Egnyte, Nasuni, Nexenta, CommVault, IBM and Oracle.
Young companies without much capital are finding it easier, cheaper and faster to go to market due to use of these cloud services rather than to build their own data centers, which is where EMC rules the roost.
In addition, consumer-oriented cloud services such as Dropbox, Box, Sync.com, Carbonite and a number of others are fighting with EMC's own Mozy for subscription customers.
Nonetheless, EMC is optimistic about the future of its business—primarily, but not exclusively, data storage—due to the ever-increasing amount of old and new data that must find a safe, secure place within enterprise IT systems.
"EMC is at the threshold of expansive opportunity," David Goulden, EMC's chief executive of Information Infrastructure and chief financial officer, said on a conference call to analysts.
"While planned business practice changes had a negative impact on year-over-year revenue and EPS growth in the quarter, we are very confident we are on the right track."
Overall, EMC's stock price is up 6.4 percent thus far this year.