EMC Rides ILM To Riches

EMC reported a 52 percent jump in earnings Thursday, powered by sales in its booming services business, VMware virtualization software and mid-range Clariion storage hardware line.

The information systems vendor posted revenue of $2.34 billion in the second quarter, 19 percent higher than the $1.97 billion reported in the second quarter of 2004.

The Hopkinton, Mass., storage giant said net income for the quarter was $293 million, compared to the $193 million reported for the same period last year. Earnings per share were 12 cents, an increase from 8 cents per share in the year-ago quarter.

EMC President and CEO Joe Tucci said he believed EMC grew at twice the rate of the overall storage market, attributing the success to customers’ rampant adoption of EMC’s information lifecycle management (ILM) method of storing data.

“Clearly, we are taking share across the board and are fulfilling our promise of growing at twice the rate of the market,” Tucci said on a conference call Thursday. “The market environment is plenty robust enough for us to do what we need to do.”

ILM pushes tiered storage, software and services for managing data from its inception to its destruction. ILM is a popular strategy for many customers seeking to corral information at a time when corporations are under pressure to comply with record retention regulations such as HIPAA and Sarbanes-Oxley.

Some figures bear out Tucci’s ILM claim: the second quarter was the eighth consecutive quarter in which the company has posted double-digit revenue growth.

EMC CFO Bill Teuber said systems revenue grew 15 percent in the second quarter to $1.1 billion. The company’s high-end Symmetrix DMX 2 line grew only 4 percent, but Clariion shone the brightest, growing 32 percent.

On the subject of Symmetrix, Tucci couldn’t resist confirming the company’s Monday launch of the product’s next iteration, known internally as Symmetrix 7.

Though he didn’t announce more details about the new system, he did say new Symmetrix models could help the company phase out older models, as the push for more drives increases.

The software business, which the company has taken great pains to bulk up over the last four years through acquisitions, enjoyed growth of 23 percent from the second quarter of 2004, to $878 million.

Subsidiary VMware is booming, achieving revenues of $91 million in the second quarter, a year-over-year increase of 93 percent. EMC said VMware’s revenue growth was driven by the sale of virtualization software for server consolidation and business continuity.

Sales of services and maintenance grew 26 percent year over year to $389 million during the quarter.

Looking forward, Teuber said he expects revenues for the third quarter of 2005 to be flat compared to the second quarter, with EPS of about 12 cents. For the year, he said he expects the company to grow sales 17 percent, with EPS of 50 to 51 cents.

EMC, which has $7.7 billion in cash in the bank, will host its annual analyst meeting August 4 in New York City.

Article courtesy of Internet News

Clint Boulton
Clint Boulton
Clint Boulton is an Enterprise Storage Forum contributor and a senior writer for CIO.com covering IT leadership, the CIO role, and digital transformation.

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