EMC's profit off 14 percent; Hopkinton firm's revenue rises 17 percent to $3.5B.

Byline: Mark Jewell

HOPKINTON - EMC Corp.'s first-quarter profit dipped 14 percent on acquisition-related charges, but the data storage vendor managed to post a double-digit revenue gain amid a slow U.S. economy.

Shares rose almost 2 percent yesterday after EMC said it is sticking with its earlier forecast for double-digit profit and revenue growth this year despite the threat of a recession.

"For sure, the global economic environment is tough, and I don't anticipate it will get easier anytime soon," Joe Tucci, EMC's chairman, president and chief executive, told analysts on a conference call. "Having said that, despite this backdrop there is and will be enough opportunity for the products and services that EMC has in its portfolio for us to achieve our 2008 goals."

Hopkinton-based EMC said its profit fell to $268.8 million, or 13 cents per share in the three months ended March 31, down from $312.6 million, or 15 cents per share, in the same period a year ago.

The latest quarter's performance was hurt by a $79 million non-cash charge to write off research and development operations from recent acquisitions. Without that charge and other one-time items, EMC's profit was $477.3 million, or 23 cents per share.

Revenue rose 17 percent to $3.47 billion, beating the $3.45 billion consensus estimate of analysts surveyed by Thomson Financial. EMC's profit matched analysts' estimate.

Despite a lagging U.S. economy that threatens to slow technology spending, EMC posted 14 percent first-quarter revenue growth in North America. Overseas, where EMC has consistently posted stronger growth, the revenue gain was 21 percent.

"The troubled economic impact was pretty much a U.S. issue, resulting in a bit of slowdown in IT (information technology) spending," Tucci told analysts, noting that customers in financial services, automobiles and retail were taking longer than usual to place orders.

EMC's biggest business area, storage systems, posted a 10 percent revenue gain, with software license and maintenance revenue rising 18 percent. Revenue from a segment that includes professional services and systems maintenance posted 30 percent revenue growth.

Banc of America Securities analyst Scott Craig said in a research note that EMC's results appeared to be "a mild positive, considering there was some concern regarding the storage spending environment."

EMC shares rose 30 cents, or 1.9 percent, to close at $15.89 yesterday.

EMC, whose chief rivals are IBM Corp., Hewlett-Packard Co., and Network Appliance Inc., stuck with a forecast it offered in early February for full-year revenue growth of 13 percent to $15 billion, and 14 percent profit growth to 78 cents per share. The revenue estimate is in line with analysts' expectations, while the profit forecast falls a penny per share below analysts' estimate.