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EMC (NYSE:EMC) is due to release its Q3 earnings on October 24. Last quarter, it reported consolidated revenue of $5.31 billion, a 10% increase YOY driven by the growth in Big Data and cloud computing, with high-end and mid-end storage network revenues growing by 7%. This is also the 10thconsecutive quarter of double digit YOY revenue growth for EMC. The company generated operating cash flows of $1.24 billion and free cash flows of $958 million, a YOY increase of 16% and 36%, respectively. It has maintained its outlook for FY 2012 at $22 billion in revenues. We highlight some of its key business drivers and what to expect from the company in 2012.

Outlook For 2012

The company expects 2012 revenues of $22 billion, with operating income of 17.5% of revenues, or $3.85 billion. Further, EMC expects consolidated operating cash flows of $6.2 billion and free cash flows of $4.9 billion for this year. It also plans to repurchase $700 million of its common stock in 2012.

Hardware Business To Get A Boost As Lenovo Opens Up The Asian Market

EMC and Lenovo Group have entered into a strategic partnership to resell storage equipment and servers made by EMC. They will test their products in China before expanding to other locations. China is the world’s second largest economy, and EMC will gain a foothold in this massive market through this partnership. The partnership will also open up markets outside of Asia for Lenovo, and will help it expand into products beyond personal computers in Asia. The companies will also form a joint venture to sell storage equipment to small and mid-sized businesses. Lenovo will own a 51% stake and will also contribute an undisclosed cash sum. Information storage is the most valuable division for EMC, and constitutes nearly 43% of our current Trefis price estimate for the stock.

EMC acquired XtremIO in May 2012 to improve its flash memory storage offering, and this is reflected by growth in its high-end storage network. Through its Velocity program, the company has signed up major providers such as Verizon-Terremark, Singapore Telecommunications and AT&T to provide private cloud networks, and we expect this division to grow significantly in the second half of 2012. EMC is already the market leader in the global external disk storage systems market, and we expect it to maintain its leading position.

We have a $52 Trefis price estimate for EMC, which is significantly higher than the current market price.

Disclosure: No positions

Source: EMC Results Will Ride Big Data And Cloud Market Growth