For the second quarter in a row, EMC Corp has failed to meet its financial guidance, this time blaming a high-end product transition for the disappointing results.
Preliminary second quarter results issued by the company show revenue of $2.58bn, up 10% from last year, but a shade below the guidance of $2.66bn revenue given in April. GAAP EPS was $0.12, compared to guidance of $0.13.
EMC blamed the shortfall on delayed orders from customers, and on customers switching from the DMX-2 to the DMX-3 version of the Symmetrix disk array faster than it had expected, causing it to sell out of the newer box.
We therefore did not have the right inventory mix to fulfill demand as we closed the quarter, said EMC CEO Joe Tucci.
The first DMX-3 was launched twelve months ago, but the majority of the DMX-3 lineup did not ship until the beginning of this year, putting EMC in the midst of a product transition now.
But other factors may have affected EMC, such as competition from Hitachi Data Systems.
There’s been some very intense pricing pressure. It wouldn’t surprise me if EMC pushed out a lot of DMX-3 to protect their footprint – at the expense of revenue, said Greg Schulz, analyst at the StorageIO Group.
EMC’s share price has been falling steadily for the last three months, and the company is already unpopular with some financial analysts, many of whom were critical of the $2.1bn cash purchase of RSA Security Inc that EMC recently announced.
The Q2 results news provoked heavy trading in EMC’s stock, pushing its price down 7% to $10.40. At the beginning of March, the stock price was $14.75.
For the first quarter EMC also missed its revenue guidance, although by a narrower margin. For that period, EMC said it sales of its storage management software had slumped. For its latest quarter, EMC said only that its VMWare, Smarts and Documentum software sales were strong.