EMC report first-quarter profit

EMC Corporation, the world’s number three maker of computer data-storage machines, had a first-quarter profit because of an increase in services revenue and demand for new products.

Net income was $35.2 million, or 2 cents a share, compared with a loss of $76.9 million, or 3 cents, a year earlier, the company said in a statement. Sales rose 6.4% to $1.38 billion.

EMC’s new products are faster, make more efficient use of storage space and save customers money, analysts have said. EMC expanded its line of cheaper hardware, upgraded its most expensive models and now offers software that lets customers control storage systems made by different vendors.

“EMC is well-positioned to fight it out with competitors. It still won’t be a walk in the park,’ said Nitsan Hargil, a Friedman Billings Ramsey & Co. analyst who rates EMC “outperform’ and said he doesn’t own the shares.

Analysts expected an average profit of 1 cent a share in the quarter, according to a Thomson Financial survey.

EMC Chief Executive Officer Joseph Tucci said on a conference call that he still expects the company to be profitable in each quarter this year. New products and cost-cutting have helped EMC compete with No. 1 storage maker Hewlett-Packard Co., No. 2 International Business Machines Corp. and Veritas Software Corp.

Shares of Hopkinton, Massachusetts-based EMC rose 62 cents, or 8%, to $8.39 at 4:02pm in New York Stock Exchange composite trading. They have gained 37% this year.

For their second-quarter forecast, the company said it will earn 3 cents a share and have sales of $1.43 billion to $1.48 billion. It was expected to earn 2 cents a share on sales of $1.46 billion, according to Thomson Financial.

Gross margin, or the percentage of sales left after subtracting manufacturing costs, widened to 43.2% from 38.5% a year earlier.

Tucci has been trying to increase sales of software and services, which are more profitable than hardware. A partnership with Dell Computer Corp. to sell cheaper EMC storage machines is paying off in sales, both companies have said.

Last quarter marked the first time Dell not only sold but built some of the least expensive EMC machines, part of the Clariion line, which list for round about $20,000.

The company plans to expand the Clariion line this year. It’s possible that Dell will both resell and manufacture some of the new machines, Tucci said in an interview.

New Products New versions of Symmetrix, the DMX line, accounted for 56% of total Symmetrix sales, beating the company’s previous expectations of 50%. Some analysts were concerned that DMX, which EMC started selling in February at prices ranging from $409,000 to $2.5 million, were not meeting company forecasts.

Customers that bought the new DMX system in the quarter include American Family Insurance Group, the Air Force Reserve Command and mortgage company Nationwide, EMC said.