UPDATED 03:45 EDT / JANUARY 28 2016

NEWS

EMC reports flat Q4 as Dell takeover looms

Following its fourth quarter earnings call yesterday, storage giant EMC Corp. saw it’s shares fall to the lowest level since it announced to the world that it would be acquired by Dell Inc. in a blockbuster $67 billion deal.

EMC’s earnings were more or less in line with Wall Street’s expectations, with overall revenues declining slightly year-over-year. As a result, the company’s shares opened for trading at just $23.76, significantly lower than the $24.05 per share that privately held Dell has agreed to pay for the firm.

During the conference call yesterday, EMC CEO Joe Tucci reiterated what the company has been saying all along – that the transaction remains on track as per the original terms and timeline. Dell and EMC said last year they plan to complete the merger of the two firms by no later than October 2016.

According to Tucci, Dell and its partner Silber Lake will have no troubles in raising the necessary capital required to complete the acquisition. That would see Dell raising almost $50 billion in debt to finance the deal, but in recent weeks concerns have been raised that it may struggle to do so, due to a declining appetite for corporate debt among bond investors, and the 15 percent drop in EMC’s share price since the deal was announced.

“We are highly confident in the contractual terms we have in place, that we will meet those contractual terms,” Tucci insisted. “There are significant penalties in place both ways if this doesn’t happen. The banks are fully committed.”

EMC said it achieved earnings of $0.65 per share on fourth quarter revenues of $7 billion. Revenue from the sale of its products fell by five percent year-over-year to $4.1 billion, but this was partly offset by a six percent rise in services revenue to $2.9 billion. EMC’s fiscal year ended up with $24.8 billion in sales, one percent up from the year before.

However, the biggest concern was that EMC’s main information infrastructure business saw sales fall four percent year-over-year to $5.1 billion, though this was adjusted to just one percent when taking into account the effect of the strong US dollar. EMC’s sales in Asia and North America were flat, but declined by one percent in Europe and 16 percent in Latin America.

Also yesterday, EMC said it was appointing chief accounting office Denis Cashman as its new CFO, replacing Zane Rowe, who takes the CFO chair at EMC subsidiary VMware Inc.

There was a bright spot for EMC at Pivotal Software Inc., the Federation’s Big Data and analytics product vendor, which saw revenues rise by 25 percent to $82 million. Pivotal finished the year with an encouraging $267 million in revenues, accounting for around one percent of EMC’s total revenue.

Photo Credit: EMC Deutschland via Compfight cc

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