EMC Snaps Slump, Turns A ProfitEMC Snaps Slump, Turns A Profit

Despite a stock price that's still trying to reach $8 and the continued absence of a crystal ball into customers' buying thoughts, EMC Corp. turned a profit in its first quarter, breaking a string of bruising quarters. But while the storage leader is doing a better job with software and services, its fortunes still ride very much on high-end storage hardware.

In the first quarter ended March 31, EMC reported $1.38 billion in revenue, 6% more than the $1.30 billion it reported in the same quarter last year. First-quarter net income was $35 million, or 2 cents per share, compared with a loss of $77 million, or 3 cents per share, in the year-ago quarter.

While president and CEO Joe Tucci credited a powerful innovation engine in storage platforms, software, and services, big-iron storage hardware still played a huge role in the quarter. On April 15, EMC acquired storage resource management vendor Astrum Software, but it will be at least a couple of quarters before Astrum's offerings are integrated with EMC's other software products.

Shebly Seyrafi, a financial analyst at A.G. Edwards & Sons, thinks enough DMX sales came in late in the quarter to help EMC turn a profit. Symmetrix DMX is EMC's new high-end storage system; it's built on a new matrix networked architecture, which shipped on Feb. 3, in the middle of the quarter. Seyrafi says it endured long sales cycles, including testing, that don't exist this quarter. He feels EMC might show an additional penny of profit per share in the current quarter thanks to a "more meaningful DMX ramp."