EMC blames target miss on economy and politicians

EMC’s latest quarterly revenues missed analysts expectations yesterday, as the company cut its forecast for the coming year.

Revenue for the third financial quarter of the year grew 6% to $5.3 billion, short of the expected $5.5 billion. The company now expects full year revenues to reach between $21.6 billion and $21.75 billion, having previously forecast $22 billion.

"We were disappointed that we did not quite meet our internal revenue expectations," CEO Joe Tucci told investment analysts.

However, Tucci laid the blame squarely with the economic and political environment. "First, there’s economic uncertainty as demonstrated by the fact that most major markets around the world exhibited at least slightly lower GDP growth rates in Q3," he said.

"This economic uncertainty has a twin brother called political uncertainty," Tucci added. "Confidence in governments around the world that make productive and timely decisions on real pressing issues like deficit reductions and tax policies is at a low point.

"Collectively, these economic and political uncertainties are affecting business confidence, and this is affecting IT spending rates," Tucci said. EMC has therefore downgraded its estimate for global IT spending growth this year from 3% to 2%.

He said the company had ‘confidence’ in the future. "We do not expect the economy to get better this year, but we do like how we’ve positioned the company near term and long term", Tucci said, making particular reference to big data, cloud and security technologies.

During the quarter, EMC’s storage division grew by just 3% to $3.8 billion. Security unit RSA rose 5% to $227 million, while the ‘information intelligence’ group, which sells content management system Documentum among other products, shrank 2% to $158 million.

Much of EMC’s growth therefore came from subsidiary VMware, whose sales grew 20% to $1.1 billion.

Tucci reaffirmed EMC’s commitment to the VCE Alliance, its partnership with Cisco, following VMware’s acquisition of software-defined networking start-up Nicira.

"Some have called into question the viability of our relationship with Cisco and VCE because of VMWare’s entrance into the networking space," he said. "The reality is that software-defined networking complements the network infrastructure, and EMC has no plans to drive deeper into networking by acquiring a network hardware company."

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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