EMC Records Healthy Growth As Profits Surge

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EMC has posted another set of strong financial results, but did it manage to impress Wall Street?

Storage giant EMC has witnessed a highly profitable fourth quarter and fiscal year, after it posted record financial results.

EMC’s fourth-quarter net income was $1.2 billion (£760m), an increase of 12 percent from the same period in 2011. Revenue totalled $6 billion (£3.8bn), up 8 percent from the year-ago quarter.

And the good news continued after it posted full-year 2012 net income of $3.8 billion (£2.4bn), an 11 percent increase from 2011. Revenue was $21.7 billion (£13.8bn), a gain of 9 percent from 2011.

Wall Street Reaction

Wall Street, which has been bashing IT companies lately, wasn’t that impressed, however. EMC’s stock was selling for $24.15 (£15.33) a share slightly before the closing bell, down 4.2 percent from the previous day’s close.

EMC has enjoyed a string of highly profitable quarters for the last decade, ever since it bought VMware in 2003 and annexed companies such as RSA (security), Data Domain (new-generation intelligent storage), Avamar (deduplication) and numerous others in the last several years.

Joe Tucci, EMCMost of those 10 years have seen double-digit revenue and profit as the storage market flourishes; some of the double digits have gone away, but the Hopkinton, Mass.-based company’s profitability remains strong.

“EMC achieved its first $6 billion (£3.8bn) quarter for revenue, capping off a record-breaking 2012,” President, CEO and Chairman Joe Tucci said on a conference call. “EMC remains squarely at the centre of the most disruptive and opportunity-rich shift in IT history, propelled by the benefits of cloud computing, big data and trusted IT.”

In the fourth quarter, revenue from EMC’s networked storage platforms portfolio – which includes EMC’s high-end and mid-tier storage platform products, grew 6 percent year-over-year. More specifically, revenue from EMC’s recently reconditioned high-end Symmetrix storage product line increased 6 percent from the year-ago quarter.

Storage Focus

EMC is morphing into an all-purpose IT hardware, software and service company, but storage hardware is still its main product. Revenue from EMC’s mid-tier storage products catalogue increased 5 percent year-over-year, led by continued revenue growth of EMC’s Data Domain and Isilon scale-out network-attached storage (NAS) products.

The company also saw continued high demand for its NAND flash-based caching and storage software, Tucci said.

Additional fourth-quarter information in the report included year-over-year revenue growth for EMC’s Greenplum analytics product list. VMware, by far the world’s largest virtualisation software provider, grew revenue 22 percent year-over-year.

EMC’s VSPEX reference architecture packages continued to gain momentum among customers and partners, who have sold more than 1,300 VSPEX systems since their launch in April 2012.

VCE, a separate company spun off by EMC, Cisco Systems and VMware, makes converged cloud infrastructure systems that are gaining traction as demand for Vblock systems continues, Tucci said.

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Originally published on eWeek.

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