EMC Corp, the world's largest maker of storage computers, said fourth-quarter profit climbed 35 percent as the company continued to expand its software and service products.
Net income rose to US$525.7 million, or 24 cents a share, from US$388.8 million, or 18 cents, a year ago, the Massachusetts company said yesterday in a statement. Sales increased 19 percent to US$3.83 billion, topping the US$3.67 billion average estimate of 21 analysts in a Bloomberg News survey.
Chief Executive Officer Joseph Tucci's fourth quarter acquisitions included software company Berkeley Data Systems Inc, which EMC is using to offer online backup storage to personal computer users. Tucci, 60, has spent more than US$8 billion on acquisitions since 2003 to spur growth through software, which offers wider profit margins than hardware.
"They are adding software and services to the legacy hardware business," Kimberly Caughey, senior equity analyst at Fort Pitt Capital Group in Pittsburgh, said in an e-mail before yesterday's report. "We would expect the trend of gross margin expansion to continue."
Gross margin, the percentage of revenue left after deducting production costs, widened last year from 52.8 percent in the first quarter to 54.4 percent in the second and 55.2 percent in the third.
EMC rose 19 cents, or 1.1 percent, to US$16.91 on Monday in New York trading.