DATA STORAGE equipment maker EMC said it was bracing for weaker tech spending and continued economic weakness in Europe but stood by its full-year profit target after reporting solid second-quarter earnings.
The company said it had lowered its expectations for growth in global spending on information technology to around 3 per cent or a bit less, as customers delayed purchases.
“Previously, we believed 2012 IT spending growth would be in the higher end of the 3 per cent to 4 per cent range,” said chief executive Joe Tucci. “On the macro front, pretty much everywhere in the world we are seeing more caution and more scrutiny before any decisions to procure any IT product or service is made.”
EMC, the world’s biggest maker of corporate data storage equipment, reiterated its previous full-year profit forecast of $1.70 a share, three cents below analysts’ average forecast.
It repeated its revenue outlook of $22 billion, compared with an average estimate of $22.1 billion. It predicts free cash flow of $4.9 billion this year and expects to buy back $700 million of its shares.
Most analysts welcomed the second-quarter results in light of continued economic worries and recent warnings from other tech companies.
“In light of macro uncertainty, Europe headwinds, and soft recent results out of the company’s main competitor [NetApp], we would characterise these results as very respectable and a positive sign that EMC’s business is holding up well in the field,” Daniel Ives, an analyst at FBR Capital Markets, said in a note.
Shebly Seyrafi, an analyst at FBN Securities, cautioned that Europe was a key risk for EMC.
EMC said the third quarter was typically the weakest quarter in Europe and that “economic headwinds in Europe are going to remain choppy at best, and we expect this to continue for a while”.
EMC last week announced preliminary second-quarter results that were largely in line with expectations, amid a management reshuffle. Final figures were reported yesterday.
Profit, excluding one-time items, was 39 cents a share, with revenue up 10 per cent to $5.31 billion. – (Reuters)
