For software operator EMC (NYSE: EMC), a key goal was to hit $15 billion in revenues in 2008. Unfortunately, the company missed the mark by about $100 million.
Going into Q3, EMC was on track to hit its goal, but, of course, the economy went into a tailspin in Q4, and EMC couldn't avoid the impact. In the quarter, the company's revenues inched up 5% to $4.02 billion. Net income was $288 million, or $0.14 per share.
Unfortunately, the outlook looks fairly bad for 2009. Based on a variety of surveys, IT spending could drop 10% for the first half of this year.
It also helps that EMC has a diverse technology platform. Offerings cover areas like storage, security, virtualization, compliance and risk management. In fact, these are areas that are key priorities for customers.
Moreover, EMC is in the midst of critical product launches, such as in unified storage and data duplication.
Yet, in light of the dicey IT environment, the drop-off in spending could be significant going forward. So despite EMC's advantages, it's hard to see much upside on the stock for the near-term.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
1-28-2009 @ 10:39AM
emax said...
While overall IT spending might drop, EMC as a company is going to be able to survive, and survive quite well. I would bet that some of EMC's competitors will go out of business, or be absorbed into other companies, while EMC stands strong on its own.
Information storage is basically a necessity for Global Business and EMC is the place to go for it. Companies now rely heavily on technology like EMC's and unless they go under completely they will have to spend money on things that EMC sells.