EMC Corp cuts profit forecast, citing stronger dollar

Reuters News
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.

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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)