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If you don't know much about EMC Corp. (NYSE:EMC), it could be for two reasons. First, in the age of technology when attention is paid to those on the front end (i.e. Apple, Microsoft, eBay, etc.) EMC does its work in the background as one of the leading infrastructure and data storage providers. And really, what's sexy about data storage?

Second, it tends to be overshadowed by its traditional rivals - IBM (NYSE:IBM), Dell (DELL) and Hewlett-Packard (NYSE:HPQ). And it has significant competition from NetApp, which is a supplier of enterprise storage and data management software and hardware products and services.

Comparing EMC to these competitors shows that the company is holding its own in the industry and could reward investors in the future.

Valuation and Growth Comparison

Consider the valuation of these companies. IBM trades at a price to earnings ratio of 13.4 and price to book of 11.46. HP cannot be valued on a P/E basis since it did not have a profit in its last quarter, but is trading at price/book ratio of 1.66. Dell is currently trading at a P/E of 9.9 and a price/book ratio of 2.18.

EMC is trading at a price to earnings ratio of 18.4, higher than IBM, but on a price to book ratio of just 2.13, far lower than Big Blue. Both of EMC's valuation ratios are lower than NetApp's, which has a P/E of 25.2 and price/book of 2.71.

But EMC is superior to NetApp in other measures. EMC has three times NetApp's revenue, and it is more diversified. NetApp's revenue, on the other hand, derives from a single segment, enterprise data storage systems.

EMC beats the competition in key management effectiveness ratios. Over the last five years, the company's average return on investments has exceeded the industry average, 10.3% to 9%. Its return on assets has exceed the industry average 6.3% to 5.7%. And its average net profit margin has been 11%, compared with the industry average of 7.1%.

EMC s sales have increased every year for the past four years, though growth has slowed a bit, from $14 billion in 2009 to $17 billion in 2010, $20 billion in 2011 and $21.7 last year. On the other hand HP's sales fell 5.6% between 2011 and 2012, and IBM's sales decreases slightly as well.

Both EMC and IBM have reported steady growth in net income over the last four years - though IBM's profits dwarf EMC's by nearly 8 to 1. HP had flat net income from 2009 to 2011 and reported a $12.765 billion loss in 2012.

Potential Acquisition Looming

IBM and EMC are reportedly in a competition of another kind: the purchase of a company called SoftLayer, which is a cloud provider. The deal could be worth as much as $2 billion.

Cloud computing is the practice of using a network of remote servers on the Internet to store, manage and process data, rather than using a traditional local server. Providers of cloud computing are in high demand, and thus popular takeover targets, because they help companies avoid infrastructure costs related to traditional servers, and they help enterprises get their applications up and running faster.

If EMC wins the battle, it is a solid bet that it will get a sizable return on the investment. In 2003, EMC purchased VMware for $660 million, and has recently spun off the company, which is now valued at $30 billion.

In the first quarter, EMC and VMware announced that they would form a new company - Pivotal - which unites strategic technology, people and programs from EMC and VMware. According to the company, Pivotal's mission will be "to deliver the world's most powerful enterprise platform-as-a-service enabling customers to build a new class of applications, leveraging big and fast data, and do all of this with the power of cloud independence." Experts say Pivotal will address the need of companies by creating an essentially new computer operating systems that can address several demands, such as coping with the barrage of information from smartphones and other mobile devices.

What's more, Pivotal attracted a $105 million investment from General Electric, representing a 10% equity stake.

First-Quarter Earnings Results

EMC's first quarter 2013 revenue was $5.39 billion, up 6% compared with the first quarter of 2012. Net income was $850 million, an increase of 4% over the previous year's first quarter, while earnings per share came in at $0.39, an increase of 5%.

Product sales climbed 1.4% year over year but plunged 16.5% sequentially to $3.11 billion. Services surged 12.3% from the year-ago quarter but decreased 1.1% from the previous quarter to $2.28 billion.

Revenues for the Information Infrastructure segment, which account for 80% of company revenues, increased 3.9% year over year but declined 11.4% sequentially to $4.20 billion.

EMC's majority owned VMware Inc. continued to impress with revenue growth of 12.8% on a year-over-year basis to reach $1.19 billion. Sequentially, VMware revenues decreased 8% in the reported quarter.

Also during the first quarter, EMC increased operating cash flow and free cash flow on a year-over-year basis to $1.71 billion and $1.44 billion, respectively. First-quarter GAAP and non-GAAP gross margins grew on a year-over-year basis, and the company ended the quarter with $12 billion in cash and investments.

Shares of EMC have been up and down in the last year, ranging from a 52-week high of $28.75 set in early May of 2013 to a recent low of $21.45.

In a sign of how fickle Wall Street can be, the company's stock price took a slight hit after its earnings announcement. Its earnings per share missed consensus estimates by a penny, while revenue was $3 million short of expectations.

Also, because revenue and earnings fell on a sequential quarter basis, analysts have a more negative outlook for the company's second quarter. The average estimate for next quarter's earnings has fallen from a profit of $0.45 to a profit $0.43. For the current year, the average estimate has moved down from a profit of $1.90 to a profit of $1.86.

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Source: EMC: A Rewarding Investment?