Storage Earnings: EMC Down, But Investors Shrug It Off

EMC Western Digital McData QLogic

EMC on Thursday reported revenue of $1.5 billion for its fourth quarter ended Dec. 31, down more than 43 percent from the $2.6 billion recorded a year ago.

Earnings decreased too, as the company showed a loss of 3 cents per share, down drastically from a profit of 25 cents per share for the same quarter last year. However, analysts were expecting a loss of 7 cents per share, according to First Call.

Total revenue for the year was $7.1 billion, about 20 percent lower than the $8.9 billion booked in 2000 and a far cry from the $12 billion EMC executives predicted for the year. For the entire year, EMC lost $508 million, or 23 cents a share, compared with income of $1.78 billion, or 31 cents a share, for 2000.

EMC will continue its restructuring and expects to lay off another 1,140 employees in the next few months, leaving it with a total of about 19,000 people by mid-2002, said Joe Tucci, president and CEO. The company will also continue to transition to a mixed direct and channel sales model. "Channel partners will be our root to geographies we couldn't reach before," he said.

Research firm RBC Capital Markets, in a written report, said it is encouraged by EMC's cost-cutting measures and its focus on developing its software business, and raised earnings predictions for the vendor to 2 cents a share in fiscal 2002, up from previous predictions of a loss of 5 cents a share. However, EMC's revenue was predicted to fall to $6.5 billion in 2002, while recovering to $7.4 billion in 2003.

EMC's earnings were announced before the opening of the stock market, which drove the company's shares up $2.27 to $16.83.

Good news came from Western Digital Thursday after the close of the stock market as the company reported increased revenue and earnings for its second quarter ended Dec. 28.

Revenue for the Lake Forest, Calif.-based hard drive vendor was $575 million for the quarter, up slightly from the $562 million reported a year ago. Income was $9.2 million, or 5 cents per share, compared with a loss of $7.0 million, or 4 cents a share, a year ago. Analysts had been expecting the company to report income of 4 cents per share, according to First Call.

Western Digital shares rose 6 cents to reach $7.11 on Thursday.

Storage switch vendor McData, Broomfield, Colo., on Thursday reported revenue of $93.5 million for its fourth quarter ended Dec. 31. That was a 19 percent jump from the $78.3 million reported for the same quarter last year.

McData also reported a loss for the quarter of $6.0 million, or 5 cents a share, compared with income of $12.3 million, or 11 cents a share, last year. Analysts had been expecting the company to break even for the quarter, according to First Call.

For fiscal 2001, McData reported revenue of $344.4 million, up from the $248.7 million reported in fiscal 2000. For the year, the company lost $8.7 million, or 8 cents a share, compared with income of $30.8 million, or 31 cents a share, reported last year.

For the current quarter, McData expects revenue to be between $85 million and $95 million, representing an increase of between 2 percent and 14 percent over the same quarter last year. Pro forma income is expected to be about 2 cents per share for the quarter, and between 13 cents and 20 cents a share for the year.

McData reported earnings after the close of trade on Thursday. For the day, its stock price rose 99 cents to $31 a share.

QLogic, Aliso Viejo, Calif., on Wednesday reported third-quarter revenue of $82.6 million, down 14 percent compared with revenue of $97.2 million last year. The company earned 18 cents per share, compared with 26 cents per share last year, and under First Call analysts' expectations of 20 cents per share.

The company reported earnings at the close of the market on Wednesday. Investors expressed their displeasure by bringing the company's stock prices down $2.68 a share to $48.34 on Thursday.