By SHARA TIBKEN
EMC Corp. reported record first-quarter results, buoyed by demand for its data-storage products and its growing international markets.
The Hopkinton, Mass., company has posted strong results of late as customers seek efficient ways to store and access mounting troves of documents and media. Demand is expected to rise as more customers move to so-called virtualization and cloud computing, which allow companies to lower data costs and move content more nimbly over the Internet or private networks.
EMC finance chief David Goulden said that for the fifth consecutive quarter, EMC gained market share, invested aggressively to take advantage of cloud computing and storage demand, and improved profitability.
He said the company is "even more confident" of meeting and potentially exceeding its goals this year for revenue and per-share earnings excluding one-time items.
While there has been some weakness among consumer spending on technology, enterprise spending has been holding up well. Chip maker Intel Corp. and tech giant International Business Machines Corp. late Tuesday both reported a surprising surge in sales and profits after seeing a big boost in spending from businesses, especially on servers and machines used in corporate data centers.
EMC Chief Executive Joe Tucci on a conference call reiterated expectations for growth in information-technology spending this year at the higher end of a projected range of 5% to 7%, but he said there are some risks the company continues to monitor.
"While we are pretty confident that IT spending will be solid, I would like to note that there are some potential event risks such as the impacts of disasters in Japan, public sector deficits and rising commodity prices, especially oil, that can cause a sense of uncertainty," he said.
Mr. Tucci added that spending was better than average for telecommunicaitons and financial services, while public-sector spending was lower than average. "IT will not be immune from the public sector as they really sharpen their pencils and try to cut back a bit," he said.
Mr. Tucci said EMC's board continues to examine all uses of cash to generate shareholder value, including a potential dividend. But he said the focus at this time remains on stock buybacks and acquisititions.
EMC, which recently increased its storage offerings through the $2.25 billion purchase of Isilon Systems, said Isilon exceeded revenue expectations in its first quarter within EMC,. And the company's key information-infrastructure business increased its revenue 16% to $3.76 billion.
"Our storage business has never been better positioned," Mr. Goulden said.
EMC also has been benefiting from its majority ownership of virtualization software makerVMware Inc., which posted strong quarterly results on Tuesday.
EMC, meanwhile, reported a first-quarter profit of $477.1 million, or 21 cents a share, up from $372.7 million, or 17 cents a share, a year earlier. Excluding items such as a prior-year litigation reserve, earnings rose to 31 cents from 26 cents, matching expectations from analysts polled by Thomson Reuters.
Revenue increased 18% to $4.61 billion, topping analysts' forecast of $4.51 billion.
Operating margin rose to 14.6% from 12.9% amid stronger revenue from the company's Europe, Middle East and Africa region as well as its Asia Pacific region.
Revenue from the U.S., still EMC's largest market, increased 12% to $2.4 billion. Sales in the Europe, Middle East and Africa region rose 21%, while Asia-Pacific revenues jumped 43%.
Mr. Goulden said an assessment of hundreds of EMC's suppliers showed only a handful currently have some supply risk exposure to the Japan disaster. The earthquake, tsunami and nuclear problems have highlighted the global dominance of many of Japan's electronics components makers and have raised concerns about supply shortages.
"At this time, we do not see any meaningful impact in Q2 and continue to work with our suppliers to secure the components we need for the second half," Mr. Goulden said.—Drew FitzGerald contributed to this article.
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