EMC Corp cuts profit forecast, citing stronger dollar

Reuters News
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Posted: Oct 22, 2014 7:14 AM

(Reuters) - Data storage equipment maker EMC Corp cut its full-year profit forecast as it joins other companies affected by a surge in dollar that crimps demand for U.S. exports and reduces the value of overseas sales when translated back into dollars.

EMC's shares were down about 1 percent in premarket trading.

Corporations are adjusting to the new environment after more than a decade of enjoying the benefits of a relatively weak dollar.

IBM Corp on Monday said it expected dollar appreciation to have a significant impact on its fourth-quarter and 2015 results.

EMC, which expects 45 percent of revenue from global sales, forecast full-year adjusted profit of $1.90 per share, missing the average analyst expectation by 1 cent. EMC had earlier forecast $1.91 per share for the full year.

The company forecast revenue of $24.5 billion, while analysts on average expected $24.54 billion.

EMC also cited the timing of its $3 billion share buyback and the revised free cash flow outlook from its unit VMware Inc for the forecast cut.

Net income attributable to EMC shareholders rose slightly to $587 million, or 28 cents per share, in the third quarter ended Sept. 30 from $586 million, or 27 cents per share, a year earlier. (http://1.usa.gov/1uEavVO)

Revenue rose to $6.03 billion from $5.54 billion.

VMware unit forecast on Tuesday current-quarter revenue largely below analysts' estimates.

EMC's "federation strategy" comprises four main businesses - its core data-storage unit, virtualization software unit VMware, enterprise security business RSA and cloud-computing software maker Pivotal.

Its hardware and software platforms allow enterprises to store, manage, protect, and analyze massive volumes of data.

Sales rose 47 percent at EMC's emerging storage unit, which makes network-attached, cloud and all-flash storage products.

Excluding items, the company earned 44 cents per share.

Analysts on average had expected a profit of 46 cents per share on revenue of $6 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Anya George Tharakan in Bangalore; Editing by Kirti Pandey)