EMC Posts 2Q Profit - EnterpriseStorageForum.com

EMC Posts 2Q Profit

What sales slump?

Storage systems provider EMC on Wednesday reported a profit for the second quarter of $82 million, or 4 cents per diluted share, compared with net income of $1 million for the second quarter of 2002 with no earnings per share.

Analysts were generally expecting earnings per share of 3 cents.

The Hopkinton, Mass. outfit, which competes with IBM , HP , and Hitachi Data Systems , also posted revenue of $1.48 billion for the second quarter, which was 7 percent higher than sales for the same quarter last year.

While the news doesn't necessarily reflect an economic rebound, it may indicate how EMC has adapted to the challenging economic climate as it seeks to raise its profile as a seller of storage software to accompany its vaunted hardware systems. EMC took a major step in that direction last week by agreeing to acquire data archiving specialist Legato Systems for $1.3 billion.

"The two words that best describe EMC's second-quarter performance are solid and balanced," said Joe Tucci, EMC's President and CEO in a statement. "Our automated networked storage strategy and strong execution are producing good results across all major segments of our business."

Tucci said his company is reaping the benefits of a refreshed product portfolio, broadened services offerings, and an expanded distribution network.

EMC reported sequential growth across all major segments of the business for the quarter. Revenue from EMC's storage systems, including EMC's new Symmetrix DMX, CLARiiON CX, and Centera systems, grew 7 percent sequentially compared with the first quarter of 2003, with sales for its high-end Symmetrix DMX series systems accounting for roughly 80 percent of total Symmetrix systems sales.

The vendor's storage software revenue grew 8 percent sequentially compared to the first quarter of 2003. Sales from EMC's open software, which includes products developed under the aegis of AutoIS open software, grew 11 percent sequentially compared with the first quarter of 2003, with great demand for the EMC ControlCenter storage management software.

EMC's storage services revenue grew 7 percent sequentially, led by an increase in software maintenance and support.

Looking forward, EMC expects revenue in the third quarter of 2003 to be between $1.45 billion and $1.50 billion, with earnings per share of 4 cents.

EMC's good fortune was tempered somewhat by two lawsuits filed against its intended acquisition of rival storage company Legato . The Mountain View, Calif.-based vendor said it has been served with two lawsuits filed against the company and its board of directors over the agreement that EMC would purchase it.

The names of the complainants are not being disclosed in the lawsuit, which was filed in Santa Clara County Superior Court. Both assert claims for breach of fiduciary duty and self-dealing against Legato, the company said.

"We believe the allegations in these suits are meritless, and will defend the company and the individual defendants vigorously," said Noah D. Mesel, vice president and general counsel for LEGATO.

Both suits would like the court to enjoin the closing of the transaction and to force Legato to obtain a transaction in the interests of shareholders.

This story originally appeared on internetnews.com.

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