EMC reports record first quarter sales

Storage vendor projects full-year revenues will hit $US16.5 billion; profit will be 14%-plus of sales

EMC has reported first quarter revenue of $US3.9 billion, along with profits of $373 million, up 92% from the year-ago period.

EMC is the latest vendor to indicate that the storage business has significantly improved over the past year.

IBM announced that its storage revenue grew by 11% in the first quarter, with gains across our entire portfolio of storage products.

EMC CEO Joe Tucci said in a statement that "EMC is off to a strong start in 2010, turning in the best first quarter in company history."

"We are confident in our ability to lead the next major wave of IT, maintain a long-term double-digit revenue growth rate and continue to take share," he added.

EMC's record revenue comes after Canaccord Adams technology analyst Paul Mansky downgraded the company's stock from "buy" to "hold." Mansky had also downgraded shares of storage network adapter maker Emulux.

"We have broad sector concerns and in addition, we are concerned that sentiment for VMware - which is 84% owned by EMC - may be peaking and could suffer damage if the high end server market fails to deliver on schedule," Mansky wrote in his analysis.

Mansky was not immediately available for comment today on EMC's first quarter results.

VMware yesterday reported first-quarter revenue of $632 million, up 34% year-over-year.

Mansky's report also cited EMC's rising competition with sales partner Dell. Dell's resales of EMC equipment represented about 12% of the storage vendor's sales in 2008.

"This carries valuation implications for EMC. Coupled with our broader concerns across the sector, we cannot reasonably expect EMC to provide positive returns over the near term," Mansky stated.

Meanwhile, EMC reported 54% of first quarter revenue, or $2.1 billion, came from U.S. sales. Sales in the U.S. increased by 29% year over year, EMC added.

Revenue from EMC business operations outside of the United States reached $1.8 billion, an increase of 17% year over year.

The company today also forecast that total revenue for 2010 will be $16.5 billion, and said it expects its profits to total between 14% to 15% of revenue for the year.

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