EMC: Fiscal 1Q08 Financial Results

EMC Corporation announced all-time record first-quarter revenue and its 19th consecutive quarter of double-digit year-over-year revenue growth. EMC’s total consolidated revenue for the first quarter of 2008 was $3.47 billion, an increase of 17% over the $2.98 billion reported for the first quarter of 2007.

First-quarter GAAP net income was $268.8 million, or $0.13 per diluted share, which included a $79.2 million non-cash charge for in-process research and development (IPR&D) resulting from acquisitions completed during the quarter. Excluding this charge, net income was $348.0 million or $0.16 per diluted share. Non-GAAP first-quarter net income, which excludes the IPR&D charge and other items(1), was $477.3 million or $0.23 per diluted share, 28% higher than the non-GAAP earnings per diluted share of $0.18 for the year-ago period.

During the quarter, EMC generated operating cash flow of $918.3 million, an increase of 14% compared with the same period a year ago, and free cash flow of $717.5 million, an increase of 22% year-over-year.

Joe Tucci, EMC Chairman, President and Chief Executive Officer, said, "EMC is off to a solid start to the year, and we remain on track to achieve the 2008 financial targets we set for the business at the beginning of the year. We entered the year with the strongest and most diversified product, solutions and services portfolio in our history. From the consumer to the small- and medium-sized business and up through the enterprise, we are delivering to the market high-quality, innovative IT solutions faster than ever before. These offerings remain squarely aligned with top CIO spending priorities and are optimized to help businesses manage their information and drive IT efficiency throughout their organizations."

"Looking ahead, EMC’s growth opportunities are many as we continue to aggressively strengthen our core business, grow into new and adjacent markets and expand our presence around the globe," Tucci added. "The power of our technology portfolio positions us well to extend our leadership and continue gaining share."

Compared with the first quarter of 2007, EMC systems revenue increased 10% and represented 41% of total first-quarter revenue. Software license and maintenance revenue increased 18% and accounted for 41% of total revenue. Other services revenue grew 30% and represented 18% of total revenue.

From a geographic perspective, revenue from North America increased 14% compared with the same period a year ago and represented 57% of total first quarter revenue. Revenue from operations outside of North America grew 21% year-over-year, driven by double-digit revenue growth in each of EMC’s Europe, Middle East and Africa (EMEA), Asia-Pacific and Japan (APJ) and Latin America regions.

David Goulden, EMC Executive Vice President and Chief Financial Officer, said, "EMC demonstrated strong revenue growth and operating performance. Our focus on investing in and delivering the right solutions to the right markets continues as the driving force behind our successful and diversified business model. This focus will serve EMC, our customers and shareholders well as we not only sustain but extend our market and technology leadership."

In the first quarter, EMC continued to return value to shareholders by leveraging its strong cash position, spending approximately $557.2 million to repurchase approximately 36 million shares of EMC. This completed the company’s $2 billion share repurchase plan it embarked upon in January 2007. In addition, EMC recently increased its share repurchase authorization by 250 million shares.

First-Quarter Highlights
Revenue from EMC’s Information Storage business, which includes revenue from storage systems, storage software and related customer and professional services, reached $2.71 billion, an increase of 12% compared with the year-ago period. Growth in the Information Storage business was driven by strong demand for EMC’s storage products and professional services portfolio across all major geographies. EMC Symmetrix revenue increased 8%, EMC CLARiiON revenue increased 19% and EMC Celerra network-attached storage revenue increased more than 50%, each compared with the year-ago quarter. During the quarter, EMC continued to expand its storage portfolio with new products and capabilities that provide customers with ease-of-use, proven reliability and information storage innovation. For example, EMC became the first enterprise storage vendor to integrate flash-based solid state drives (SSDs) into its core product portfolio, enabling Symmetrix DMX-4 customers to achieve unprecedented performance and energy efficiency.

EMC’s Content Management and Archiving business increased first-quarter revenue 8% year-over-year to $185.2 million. Organizations around the world continued to choose EMC’s enterprise content management and archiving solutions to effectively manage their growing volumes of unstructured data, while improving business efficiencies, increasing productivity, and meeting compliance and risk mitigation requirements. Also during the first quarter, EMC’s Content Management and Archiving business captured several honors, including an ACE award from ECM Connection at the AIIM International Conference.

For the first quarter of 2008, revenue from RSA, The Security Division of EMC, grew 13% year-over-year, reaching $134.9 million. This growth was driven primarily by global demand for the division’s risk-based authentication solutions, anti-fraud services, and security information and event management solutions. Companies across industries and around the world continued to choose the powerful portfolio of RSA security products and services to address their critical requirements around data security, security information management and data loss prevention, and to drive business acceleration and innovation across their organizations.

VMware, which is majority-owned by EMC, had first-quarter revenues of $438.2 million, an increase of approximately 71% compared to the year-ago quarter. VMware is the global leader in virtualization solutions from the desktop to the datacenter. Customers of all sizes rely on VMware to reduce capital and operating expenses, ensure business continuity, strengthen security and be more energy efficient. With 2007 revenues of $1.32 billion, more than 100,000 customers, and nearly 14,000 partners, VMware is one of the fastest growing public software companies. Visit http://ir.vmware.com for more information about the virtualization software leader’s first-quarter financial results.

EMC Corporation