Both EMC and VMware (which has EMC as its majority shareholder) have released quarterly financial reports that disappointed Wall Street. EMC's net income dipped slightly, failing to meet analyst expectations. VMware earnings also declined, and the company lowered its forecast for upcoming quarters.
The Wall Street Journal's Steven D. Jones reported, "VMware Inc.'s (VMW) first-quarter earnings declined 9.3% as realignment charges weighed on the software maker's results, though services revenue rose and expense controls improved core earnings. 'The quarter was a solid start to the year despite a mixed economic environment,' said Pat Gelsinger, who took over as chief executive last year. 'Our product machine is performing very well.' However, while the company maintained its full-year revenue outlook of $5.12 billion to $5.24 billion, VMware forecast second-quarter revenue of $1.21 billion to $1.24 billion, below the $1.26 billion estimate from analysts polled by Thomson Reuters."
All Things D's Arik Hesseldahl commented, "VMware, the cloud computing software company in which EMC is a majority shareholder, is getting whacked this morning on disappointing outlook. It reported earnings yesterday. VMware said it now expects sales in the range of $1.21 billion to $1.24 billion, below the consensus view of $1.25 billion. VMware shares are falling in pre-market trading. As of 8:45 am ET, the price was $71.51, down $4.19 or 5.5 percent."
According to the AP, Data storage equipment maker EMC Corp. reported a small decline in its first-quarter net income on Wednesday. The results fell short of Wall Street's expectations as the pace of its revenue growth continued to slow. Chairman and CEO Joseph Tucci said EMC's customers remained cautious about technology spending because of the 'continuing tide of political and economic uncertainties.' But he added, in a conference call with analysts, that EMC is confident it can meet its 2013 projections thanks to a strong product cycle — especially in the second half of the year."
Reuters quoted analyst Daniel Ives who suggested that the quarter could have been much worse: "There were fears of a disaster at EMC given what we have seen around tech with Oracle and IBM. So overall it was better than feared. Would you frame this quarter in your living room? No, but most investors would take this quarter any time of the week."