Software and systems continue to drive EMC

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EMC, the world’s biggest maker of data storage equipment and software, on Tuesday reported a better-than-expected fourth quarter and a strong finish to its fiscal year as rising sales of storage systems and software helped offset a sputtering start to 2006.

“We are calling this a year of two halves,” said Bill Teuber, EMC’s vice chairman. “In the first half of the year we didn’t have a good Q1 and we had a solid miss in Q2. We bounced back solidly in Q3 and had a strong Q4.”

Revenues at the company, which has been transforming itself from a maker of storage equipment into a provider of integrated systems of equipment, software and services, rose 19 per cent in the fourth quarter to $3.3bn.

Net profits were $389m, or 18 cents per share, compared with 6 cents a share a year earlier.

Profits were boosted by a one-off $76.7m tax gain. Excluding special items and a charge for options expensing, profits grew 35 per cent.

Both revenue and profits topped forecasts.

EMC has benefited from increased demand as businesses grapple with the need to store increasing amounts of data and as governments impose stricter requirements for archiving.

For the full year, revenues rose 15 per cent to $11.2bn. Profits were $1.2bn.

Looking ahead, EMC said that it expected revenues this year of $12.7bn, an increase of 12 per cent over 2006. It forecast earnings of 64 cents a share, up 19 per cent over last year.

Revenues at EMC’s VMWare software business, which helps companies store data virtually across multiple devices, more than doubled in the quarter to $232m.

The fourth quarter also marked the first full quarter that EMC benefited from its $2.1bn acquisition of RSA Security, a maker of keychain authentication tokens and other data and network security systems. Revenues at RSA grew 26 per cent to $114m.

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