EMC to buy back $1bn in shares as profits fall 1.2%

EMC, the world’s biggest maker of storage computers, plans to buy back $1bn (€770m) in shares this year after reporting first-quarter earnings that missed analysts’ estimates as customers restrained spending.

Net profit fell 1.2% to $580.1m, or 26 cents a share, from $586.8m, a year earlier, the US multinational said yesterday.

Excluding some costs, profit was 39 cents a share, missing the 40-cent average of analysts’ estimates compiled by Bloomberg. Sales rose 5.8% to $5.39bn, compared with the $5.42bn average analyst projection.

EMC employs over 3,000 people in Ireland between all its sites, including VMware, RSA, and Mozy, and has a centre of excellence in Ovens, Co Cork.

EMC customers are trimming storage-computer purchases amid an uncertain economic outlook.

Another computer giant, IBM, last week reported first-quarter profit that missed analysts estimates, hurt by a hardware slump. It cited the poor performance of some businesses, such as certain storage products.

Sales growth at EMC’s VMWare subsidiary has been under pressure as US companies and federal agencies are reducing technology budgets.

Sales for 2013 will probably be $23.5bn, the company reiterated.

EMC, whose shares had declined 12% this year, compared with an 11% gain for the Standard & Poor’s 500 Index, rose yesterday.

VMware, the software maker majority-owned by EMC, yesterday forecast second-quarter sales that fell short of analysts’ projections as business customers trim spending. Its shares dropped 6% in extended trading.

EMC chief financial officer David Goulden said last month that the company will boost revenue by at least 8% a year and profit excluding certain costs will rise 10% annually through 2016 as it increases market share.

Sales will exceed $30bn in 2016, Mr Goulden said at an analyst meeting in New York.

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