Though it beat Q4 estimates, EMC (EMC -1%) is guiding for 2014 revenue of $24.5B and EPS of $1.95, below a consensus of $24.96B and $2.04. EMC is also guiding for Q1 revenue of ~$5.39B and EPS of $0.35, below a consensus of $5.81B and $0.43.
Q4 results were solid. Total product revenue, including that of subsidiary VMware, rose 11% Y/Y in Q4 to $4.16B. Services revenue rose 10% to $2.53B.
In addition, EMC's core Information Storage unit (71% of revenue) saw its sales rise 10% Y/Y after growing just 1% in Q3 (hurt by federal weakness). Emerging Storage products (includes Isilon scale-out NAS systems, Atmos cloud storage, and XtremIO's flash storage) grew 73% to $560M. Unified and backup/recovery storage sales (includes mid-range hardware) rose 11% to $1.87B after growing just 3% in Q3, and high-end storage rose 1% to $1.28B after declining 8% in Q3.
Gross margin fell 160 bps Y/Y in Q4 to 64.6%. EMC spent $3.01B on buybacks in 2013, and expects to spend $2B in 2014. 2013 free cash flow totaled $5.5B, above net income of $3.9B.
Yesterday: VMware offers soft margin guidance with Q4 results.