EMC Profit Declines as Merger Costs, Dollar Weigh on Results

By Lisa Beilfuss 

EMC Corp., awaiting the completion of its acquisition by Dell Inc., said profit in its latest quarter declined as a strong dollar hit revenue and as the company booked merger and restructuring charges.

Shares declined 2.1% premarket in light trading. The stock fell 6.7% over the past three months through Tuesday's close.

The Hopkinton, Mass., company struck a deal in October to be taken private by Texas-based Dell for about $67 billion, representing the biggest tech deal ever. The merger remains on track to be completed by October at the latest, EMC's Chief Executive Joe Tucci said Wednesday.

While it waits for regulatory approval EMC unveiled a restructuring plan late last month that aims to shave $850 million in costs and will include job cuts. In the fourth quarter, EMC booked $224 million in restructuring charges.

As part of the merger deal, Dell will also acquire EMC's controlling stake in VMware Inc., a seller of data-center software that accounts for about a third of EMC's top line. In the latest quarter, VMware saw revenue increase 10% and earnings rise 14% from a year earlier, though the company announced steep job cuts and slashed guidance for the year. Since the Dell deal was announced, VMware's stock has dropped 40%.

In EMC's infrastructure business, revenue declined 4%. The decline was mostly due to adverse exchange rates. "Customers are buying 'just enough' and 'just in time' for their traditional environments, said David Goulden, head of the segment.

Overall, EMC reported a profit of $771 million, or 39 cents a share, down from $1.15 billion, or 56 cents, a year earlier. Excluding merger-related costs, among other items, earnings per share fell to 65 cents from 69 cents.

Revenue edged down 0.5% to $7.01 billion. Analysts projected 65 cents in adjusted per-share profit on $7.12 billion in revenue. Stripping out exchange rate volatility, EMC said, total sales rose 3% from the year-ago quarter.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

January 27, 2016 08:25 ET (13:25 GMT)

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