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EMC Reports First Quarter Results
- 20 April, 2005 09:51
<p>Notes to editors:
- The strong global results were reflected in Australia and New Zealand, with the strongest Q1 in four years.
- Financial tables are available upon request.
- Local officials are available to discuss the results.</p>
<p>EMC Reports First Quarter Results</p>
<p>Seventh Consecutive Quarter of Double-Digit Revenue Growth; Software License and Maintenance Revenues 37 per cent of Total</p>
<p>SYDNEY, Australia – April 20, 2005 – EMC Corporation (NYSE:EMC) today reported financial results for the first quarter of 2005, achieving double-digit year-to-year revenue growth for the seventh consecutive quarter. EMC, the world leader in information storage and management, saw first-quarter growth driven by its market-leading mid-tier storage systems, expanding software business, and increasingly popular professional services.</p>
<p>Total consolidated revenue for EMC’s first quarter was US$2.24 billion, 20 per cent higher than the US$1.87 billion reported for the first quarter of 2004. Net income for the quarter was US$270 million or US$.11 per diluted share, 93 per cent higher than the US$140 million or US$.06 per diluted share reported for the first quarter of 2004.</p>
<p>Joe Tucci, EMC’s president and CEO, said, “EMC delivered its seventh quarter in a row of double-digit revenue growth, once again extending one of the strongest and steadiest growth stories in the tech industry today. Solid execution and the investments we have made to broaden our product and market reach played major roles in our ability to successfully navigate through a difficult first quarter.”</p>
<p>“Clearly, our acquisition strategy is bearing fruit, strengthening our core business and taking us into opportunity-rich adjacent markets,” Tucci continued. “We are satisfying customers’ demands with a product portfolio that is second to none and by leveraging our market leadership across all major segments of our business. We are using these combined strengths to greater and greater effect as our hardware, software and services offerings become even more tightly integrated and as we continue our new product introductions this year.”</p>
<p>Systems revenue grew 15 per cent in the first quarter, compared with the year-ago quarter, to US$1.03 billion, driven by strong, double-digit growth from the EMC CLARiiON, Celerra NAS and Centera platforms. Strong performances across each of EMC’s software businesses grew software license and maintenance revenues 26 per cent to US$832 million in the first quarter, now representing 37 per cent of total EMC revenues. Professional services, systems maintenance and other services revenue grew 26 per cent to US$375 million during the quarter, as customers around the globe turned to EMC to help manage the growing complexity of their information infrastructures.</p>
<p>Bill Teuber, EMC’s executive vice president and chief financial officer, said, “Our tenth straight quarter of meeting or exceeding our major financial objectives places us firmly on track to deliver on our 2005 goals. During the quarter, we continued to execute well across the board, achieving double-digit growth in all three major business lines and all of our major geographic regions. We generated more than US$600 million in cash from operations and used US$380 million to acquire SMARTS and to buy back 9.8 million shares of company stock. We were particularly pleased with our operating margins for the quarter and we believe we are on course to end the year with operating margins in the high teens.”</p>
<p>First Quarter Highlights</p>
<p>Demand for EMC’s broad portfolio of tiered networked storage platforms and related software drove double-digit revenue growth across its platforms businesses in the first quarter. EMC CLARiiON networked storage revenues grew 47 per cent year over year, posting solid growth across all major geographic regions, particularly Europe, and in each of EMC’s direct and indirect channels. CLARiiON’s fourth consecutive quarter of more than 40 per cent revenue growth was driven by EMC’s focus on delivering complete solutions that address the needs of midsize enterprises. EMC Celerra NAS systems revenue grew 40 per cent during the quarter, the fifth consecutive quarter of more than 30 per cent revenue growth. Customer deployments of the EMC Celerra NS Gateway filers and NS integrated products into tiered storage environments continued to drive market momentum for the industry’s most comprehensive family of NAS solutions.</p>
<p>The EMC Software Group reported revenues of US$401 million in the first quarter, a year-over-year increase of 24 per cent. Growth across the EMC Software Group’s major categories was fuelled by the tremendous value customers are realising from the ability of EMC software to help them reduce operational costs and complexity and to comply with government regulations. Storage and Management Software license revenue, which includes EMC PowerPath, the EMC ControlCenter and EMC Visual product families, and the EMC Smarts software product family, grew 21 per cent in the first quarter. Backup and Archive software license revenue, which comprises all EMC software for backup and archiving including the EMC Dantz software family, grew revenues 36 per cent during the quarter, driven by EMC Legato NetWorker, EMC Dantz Retrospect, EMC EmailXtender, EMC DiskXtender and EMC Replication Manager software. Content Management Software license revenue, including the entire EMC Documentum line, grew 23 per cent with the addition of more than 125 new customers during the quarter.</p>
<p>VMware, an EMC subsidiary, reported record quarterly revenues of US$80 million in the first quarter, a year-over-year increase of 104 per cent. VMware booked a record number of new deals and license sales represented nearly 80 per cent of VMware’s first-quarter revenues. VMware’s triple-digit revenue growth was led by strong customer demand for its virtual infrastructure software products used widely for server consolidation and containment, business continuity, test/development and the enterprise desktop. During the quarter VMware continued to strengthen its channels and deepen relationships with Dell, Hewlett-Packard, IBM and Intel. In the last year, VMware’s innovation, excellence and strategic importance to customers around the world have been recognised through more than 20 industry awards.</p>
<p>The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not give effect to (1) the provisions of the American Jobs Creation Act of 2004, (2) the potential impact of any mergers, acquisitions, divestitures or business combinations that may be announced after the date hereof or (3) the potential impact of expensing stock options under the Financial Accounting Standards Board’s Statement 123R (FAS 123R). These statements supersede all prior statements regarding Business Outlook set forth in prior EMC news releases.</p>
<p>Second quarter of 2005</p>
<p>Consolidated revenues for the second quarter of 2005 are expected to be approximately US$2.330 billion to US$2.355 billion.
Diluted earnings per share are expected to be US$0.12.</p>
<p>For the year, EMC’s addressable market is estimated to grow at around 7 per cent - 8 per cent and EMC’s consolidated revenues are expected to grow at approximately twice the upper-end of that market range. Additionally, revenue from the SMARTS acquisition is expected to add almost another 1 per cent to EMC’s revenue growth rate in 2005.
Gross margins are expected to be just under 53 per cent for the full-year of 2005.
Operating expenses (which include selling, general and administrative expenses and research and development expenses) as a percentage of revenue should be in the 35.5 per cent to 37.0 per cent range for 2005.
Operating income as a percentage of revenue should reach the high teens in the fourth quarter of 2005.
The income tax rate for the remainder of the year is expected to be around 28 per cent, excluding one-time items.
Diluted earnings per share for 2005 should be in the US$0.50 to US$0.51 range.</p>
<p>EMC Corporation (NYSE: EMC) is the world leader in products, services and solutions for information storage and management that help organisations extract the maximum value from their information, at the lowest total cost, across every point in the information lifecycle. Information about EMC’s products and services can be found at www.EMC.com.</p>
<p>EMC, Celerra, CLARiiON, Dantz, DiskXtender, Documentum, EmailXtender, EMC ControlCenter, Legato, Powerpath, Retrospect, SMARTS and VMware are registered trademarks, and Centera, ESX Server and VMware ACE are trademarks of EMC Corporation. All other trademarks are the property of their respective owners.</p>
<p>This release contains “forward-looking statements” as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) risks associated with acquisitions and investments, including the challenges and costs of integration, restructuring and achieving anticipated synergies; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (vi) component and product quality and availability; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) insufficient, excess or obsolete inventory; (ix) war or acts of terrorism; (x) the ability to attract and retain highly qualified employees; (xi) fluctuating currency exchange rates; and (xii) other one-time events and other important factors disclosed previously and from time to time in EMC’s filings with the U.S. Securities and Exchange Commission. EMC disclaims any obligation to update any such forward-looking statements after the date of this release.</p>
Corporate Communications Manager
EMC Australia and New Zealand
+61 2 9925 7942 or + 61 0408 237 309
+61 2 9954 3299