EMC 3Q profit drops but beats forecast
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SAN FRANCISCO (AP) -- Data storage company EMC Corp. said today its net income dropped 17 percent in the third quarter, a decline caused by a big one-time gain from the sale of VMware Inc. shares in the year-ago period. The Hopkinton, Mass.-based company's profit still exceeded Wall Street's expectations, a sign that demand for EMC's machines held up well despite the ailing economy and trouble among competitors. Its shares jumped 6.7 percent in morning trading. Disappointing storage numbers last week from IBM Corp., one of EMC's biggest rivals, and indications this week that Sun Microsystems Inc. will write down the value of its storage business raised fears about the health of the broader industry. EMC is the world's No. 1 maker of external disk storage machines, a business that's in a good spot because companies need more storage to manage the explosion of digital information. But it's also heavily reliant on healthy information technology spending among corporations, an area that's been wounded by the credit crunch. EMC helped ease some of those fears by reporting net income of $411.3 million, or 20 cents per share, for the July-September period, 2 cents per share higher than the average estimate of analysts polled by Thomson Reuters. The profit was 17 percent below year-ago earnings of $492.9 million, or 23 cents per share. Last year's figures were boosted by EMC's one-time sale of 6 million of its shares in VMware, a virtualization software maker, to Cisco Systems Inc. VMware was a wholly owned subsidiary of EMC until its initial public offering of stock in August 2007. EMC still owns 84 percent of VMware. EMC's sales in the third quarter rose to $3.72 billion from $3.30 billion a year ago. That was in line with the average analyst forecast. Revenue in EMC's storage business rose 11 percent to $2.9 billion. -- The Associated Press VMware contributed $472 million in sales, a 33 percent increase over last year. Under pressure from Microsoft Corp. and guided by a new CEO as it battles a slumping stock price, VMware reported Tuesday that its third-quarter profit jumped 29 percent, topping Wall Street's expectations. EMC and VMware offer complementary technologies. VMware's software allows businesses to run multiple operating systems on individual computer servers, which saves power and increases the output of those machines. That can help businesses make better use of EMC's machines by accessing their storage in a more efficient way. EMC also tamped down expectations for the fourth quarter slightly. The company said it expects results that are slightly below Wall Street's forecast. EMC expects $4 billion in sales for the last three months of the year, short of the average analyst estimate of $4.14 billion. Net income is expected to be between 23 cents per share and 24 cents per share in profit. Analysts were expecting 24 cents per share. EMC shares were up 65 cents at $10.34 in morning trading. 
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