It ain't easy to impress Mr. Market these days. A few days
ago,
Advanced Micro Devices (NYSE: AMD)
surpassed every reasonable expectation-- and got taken
out behind the woodshed for a solid beating.
Rule Breakerspick
Polycom (Nasdaq: PLCM) may not have
impressed, but it certainly
didn't deserve a 17% haircut.
And today, there's storage giant
EMC (NYSE: EMC) reporting as hale and sound a
quarter as one could hope for. Revenue of $3.52 billion is a
respectable 8% sequential uptick and far ahead of management
guidance, which pointed to no more than 5% higher sales.
Non-GAAP earnings per share of $0.23 represent a 28%
quarter-over-quarter jump, putting EMC essentially even with
the year-ago profit.
But EMC's shares are 2.8% cheaper after that seemingly
impressive report. Life just isn't fair sometimes.
And it's no sector effect this time. Competitors
IBM (NYSE: IBM) and
NetApp (Nasdaq: NTAP) are outperforming the
S&P 500 today with positive returns. Compounding the
problem is
VMWare 's (NYSE: VMW)
unexciting earnings report. EMC still maintains a
majority stake in VMWare, so when VMWare
doesn't perform up to its usual
high-growth standards, it causes some added pain at its
parent company.
Perhaps we're watching investors take some profits and
run. After all, EMC gave shareholders a market-beating 38%
return on their investment over the last six months. That's
pretty exciting for a stock with an average beta, big market
cap, and rare price-change revolutions. Now, a 3% discount
doesn't exactly make for an ideal buy-in point, but CEO Joe
Tucci believes that his company is "strategically aligned
with the
major
technology
shiftsand well positioned to play a pivotal role in the
IT industry for the next decade." That's a
sentiment I can agree with. This stock deserves a second look
from any long-term investor who wants to ride the long-term
trend toward companies needing to house infinity-minus-one
bits of data.
Have any thoughts on EMC's quarter or
on technology in general? Sound off in the comments section
below.
This article was originally published as
What's Wrong With EMC?on
Fool.com
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