EMC (NYSE:EMC) is due to release its Q3 earnings on October 24. Last quarter it reported consolidated revenue of $5.31 billion, a 10% increase y-o-y driven by the growth in Big Data and cloud computing with high-end and mid-end storage network revenues growing by 7%. This is also the tenth consecutive quarter of double digit y-o-y revenue growth for EMC. The company generated operating cash flows of $1.24 billion and free cash flows of $958 million, a y-o-y increase of 16% and 36%, respectively. It has maintained its outlook for FY 2012 at $22 billion in revenues.  We highlight some of its key business drivers and what to expect from the company in 2012.
Outlook For 2012
- Why You Should Take A Closer Look At EMC’s EPS Growth
- How A Worldwide Decline In Storage Systems Sales Impacts EMC
- How Valuable Is EMC’s Information Storage Business?
- EMC Earnings: Weakness In Hardware Remains, Non-Core Businesses Drive Growth
- How Valuable Is VMware To EMC’s Business?
- What Is EMC’s Presence In The Storage Systems Market?
The company expects 2012 revenues of $22 billion with operating income of 17.5% of revenues or $3.85 billion. Further, EMC expects consolidated operating cash flows of $6.2 billion and free cash flows of $4.9 billion for this year. It also plans to repurchase $700 million of its common stock in 2012.
Hardware Business To Get A Boost As Lenovo Opens Up The Asian Market
EMC and Lenovo Group have entered into a strategic partnership to resell storage equipment and servers made by EMC. They will test their products in China before expanding to other locations. China is the world’s second largest economy and EMC will gain a foothold in this massive market through this partnership. The partnership will also open up markets outside of Asia for Lenovo and will help it expand into products beyond personal computers in Asia. The companies will also form a joint venture to sell storage equipment to small and mid-sized businesses. Lenovo will own a 51% stake and will also contribute an undisclosed cash sum.  Information storage is the most valuable division for EMC and constitutes nearly 43% of our current Trefis price estimate for the stock.
EMC acquired XtremIO in May 2012 to improve its flash memory storage offering, and this is reflected by growth in its high-end storage network. Through its Velocity program, the company has signed up major providers such as Verizon-Terremark, Singapore Telecommunications and AT&T to provide private cloud networks, and we expect this division to grow significantly in the second half of 2012. EMC is already the market leader in global external disk storage systems market, and we expect it to maintain its leading position.
We have a $52 Trefis price estimate for EMC, which is significantly higher than the current market price.Notes: