EMC Navigates Tough Times
EMC rode its core storage products to solid first-quarter results, despite what the company said is a tough economic environment.
"The global economic environment is tough, and I don't anticipate it will get easier anytime soon," EMC CEO Joe Tucci said on the company's conference call today.
Revenues rose 17 percent from the year-ago quarter to $3.47 billion, beating Wall Street estimates. Excluding a $79.2 million non-cash charge for in-process research and development from acquisitions completed during the quarter, net income was $348 million, or 16 cents a share, meeting analysts' estimates, according to Thomson Financial.
EMC also reaffirmed its full-year expectations of 13 percent growth although the company said it will have to steal market share to do that.
EMC's core storage offerings were particularly strong. High-end Symmetrix sales rose 8 percent, mid-range Clariion sales were up 19 percent, and the company's Celerra NS20 and NS40 unified storage offerings, which combine iSCSI, SAN and NAS, were up more than 50 percent, according to CFO David Goulden. EMC added flash drive capabilities to its Symmetrix DMX-4 systems in the first quarter.
Despite some weakness in the financial services, auto and retail sectors, the company saw North American sales grow 14 percent, while sales elsewhere rose 21 percent.
EMC's Information Storage business, which includes storage systems, software and services, rose 12 percent to $2.71 billion. Content Management and Archiving grew 8 percent to $185.2 million. And the RSA Security Division grew 13 percent to $134.9 million.
The company also benefited from strong results from VMware, which posted 71 percent sales growth to $438.2 million. Tucci said the company has no plans to spin off the rest of the server virtualization company.
Tucci and Goulden said EMC sees growth opportunities in virtualization, cloud computing, green IT, tiering, consolidation, thin provisioning and de-duplication, and is focusing resources on the commercial and SME markets, high-growth economies and its NS unified storage offerings.
Tucci also said that technologies designed to improve utilization, such as thin provisioning and de-duplication, won't hurt its core storage sales, noting that there is "still plenty of growth."
EMC shares were up 2 percent in afternoon trading, and VMware shares gained 6 percent.