EMC Corporation (EMC, Financial) is a worldwide pioneer in empowering organizations and service providers to change their operations and convey IT as a service. Essential to this change is distributed Cloud computing. Through its innovative product portfolio, EMC quickens the excursion to the Cloud computing environment, helping various IT divisions of organizations to store, maintain, secure and analyze their most significant stake — data — in a more deft, trusted and expense productive. The company is increasing its grip on the storage market and its global market share increased to 25.8% as against 23.8% year ago.
Continues to post robust quarter
The company recently posted its third-quarter earnings and yet again it recorded a record in its quarterly revenue. EMC recorded a revenue growth by 9% year over year, to record $6.0 billion as compared to $5.5 billion in the same term last year. Even in a nine-month tenure for the current fiscal 2014, the consolidated revenue records $17.4 billion for nine months of current fiscal as compared to nine months consolidated revenue of $16.5 billion for the last fiscal 2013.
The company generates its consolidated revenue mainly from three different streams which comprises of Information Infrastructure business, VMvare and Pivotal. All the segments have been recording year-over-year growth in terms of the revenue, this again influences the investor.
Future looks bright
The company has been upgrading its product portfolio to be ahead in the market of storage solutions. It recently upgraded its product Isilin One FS; the upgraded product provides a better performance for storing and managing voluminous unstructured data. It now is simpler in implementation for migrating petabytes of data.
The two new platforms for Isilon is “Isilon S210” and “Isilon X410” has enhanced operation capabilities. The Isilon X410 offers 70% build in throughput at 33% less $/MBPS, and its flexibility effortlessly underpins Hadoop dissection, also provides a better performance in enterprise file application. This new platform has enabled EMC to boost its revenue in the current quarter and is anticipated to continue the growth trajectory in the future.
VMvare platform has been gaining momentum, and in the current quarter revenue gained 17% year over year. The market for SDN (Software Defined Network) has been constantly rising and this influences the growth of the VMvare platform. Analyst and research companies expect the SDN market to reach $35 billion by 2018.
Consensus of analysts estimate that next year EMC can attain growth of 12.6%. In the next five years, it is expected to grow at 10.08% every year. Total revenue for EMC is estimated to reach $24.50 billion in the 2014, and around $26.32 billion in the 2015.
Share repurchases programs
The company records a strong cash balance of over $15.4 billion. This also helps the company to implement its share repurchase programs which keep an investor satisfied. Share repurchase programs also help in posting a better EPS value for the shares. In the current quarter, the company repurchased stocks worth around $274 million and also returned approximately $240 million to its shareholders in form of dividends.
Conclusion
The company has a strong cash balance, and this always makes an investor feel safe. The strong cash and cash equivalent is the result of a strong cash flow that is achieved by the company; in the current quarter it recorded cash flow of $1.3 billion. The company is stringent on it share repurchase programs and dividends,;this further influences the EPS and safeguards the investor’s interest in the company. Analyst anticipate EPS to be around 1.9 by end of the current year and is expect to reach 2.14 next year.
Looking at the growth and strong balance sheet, I feel this can be a good buy for an investor.
