EMC: Fiscal 3Q08 Financial Results

STORAGE REVENUE

* including software licenses and maintenance

                                

EMC Corporation announced record third-quarter revenue and its 21st consecutive quarter of double-digit year-over-year revenue growth. EMC’s total consolidated revenue for the third quarter of 2008 was $3.7 billion, an increase of 13% over the $3.3 billion reported for the third quarter of 2007.

Third-quarter GAAP net income was $411 million or $0.20 per diluted share, which includes a $0.01 special income tax benefit. Third-quarter non-GAAP net income(1) was $528 million or $0.25 per diluted share, 14% higher than the non-GAAP earnings per diluted share of $0.22 for the year-ago period.

Joe Tucci, EMC Chairman, President and Chief Executive Officer, said: "Against the backdrop of a tough global economy, EMC delivered its 21st consecutive quarter of double-digit revenue growth and solid double-digit profit growth. These results reflect the high quality and leadership of EMC’s broad portfolio of storage, information management and security products and services, and the global reach of our direct sales force and trusted partners. Customers will continue to turn to EMC as they focus their efforts on cost savings and maximizing efficiency across their information infrastructure. Even with a challenging economic environment ahead, we remain confident and well positioned to compete effectively, continue winning business and outpace our peers in the marketplace."

Consolidated revenue from the United States increased 7% compared with the same period a year ago. Revenue from operations outside of the United States grew 19% year over year and represented 46% of total third-quarter revenue. Revenue from EMC’s Europe, Middle East & Africa (EMEA) region increased 20%, Asia-Pacific & Japan (APJ) revenue increased 19%, and Latin America revenue increased 27%, each compared with the year-ago quarter.

David Goulden, EMC Executive Vice President and Chief Financial Officer, said: "EMC is well positioned with the financial flexibility of a strong cash position and cash flow, along with an expanding market opportunity driven by the continued growth of business and personal information. As customers deal with this information growth, while also reducing costs and improving IT efficiencies, we are confident that EMC has the best portfolio of products and services to help them succeed. We remain laser-focused on managing our cost structure, increasing customer loyalty, maximizing shareholder value and strengthening our competitive advantage to gain market share."

Third-Quarter Highlights
Revenue from EMC’s Information Storage business, which includes revenue from storage systems, storage management software and related customer and professional services, reached $2.9 billion, an increase of 11% compared with the year-ago period. This growth was largely driven by strong customer demand for EMC’s industry-leading networked storage solutions across a broad customer base, with double-digit year-over-year revenue growth from EMC’s midrange and entry-level information storage platforms that connect to both IP and Fibre channel networks. During the quarter, EMC’s Information Storage business also benefited from double-digit year-over-year revenue growth from its broad portfolio of industry-leading backup, recovery and archive software that helps customers meet new information protection and recovery requirements, control explosive data growth and improve cost savings in the data center.

For the third quarter of 2008, revenue from RSA, The Security Division of EMC, grew 11% year over year, reaching $147 million. The third-quarter growth in the RSA business was led by customer demand for its security information and event management solutions and its identity protection and verification solutions. Growth in the business reflects the completeness of EMC’s information-centric security strategy and its leading portfolio of solutions that are uniquely suited to help customers address the overall process of securing data, managing risk, and meeting multiple compliance demands in a holistic, repeatable and cost-efficient manner.

EMC’s Content Management and Archiving business’ third-quarter revenue was $188 million. During the quarter, the business benefited from continued demand for EMC’s next-generation enterprise content management solutions for effective transactional content management, dynamic customer communication management and content management for the Web 2.0 enterprise — fostering dynamic new ways people work, network and collaborate, while advancing requirements for security, performance and compliance.

VMware, which is majority-owned by EMC, contributed third-quarter revenues of $472 million, an increase of 33% compared to the year-ago quarter. VMware is the global leader in virtualization solutions from the desktop to the data center. Customers of all sizes rely on VMware to reduce capital and operating expenses, ensure business continuity, strengthen security and be more energy efficient.

Business Outlook
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 the potential impact of mergers, acquisitions, divestitures or business combinations that may be announced or closed after the date hereof or costs incurred in expense reduction initiatives. These statements supersede all prior statements regarding business outlook set forth in prior EMC news releases. All dollar amounts in the business outlook should be considered to be approximations.

EMC’s outlook for the fourth quarter of 2008 is as follows:

• Consolidated revenues of $4 billion.
• Consolidated GAAP diluted earnings per share between $0.23 and $0.24.
• Consolidated non-GAAP diluted earnings per share (excluding stock-based compensation and intangible asset amortization) between $0.30 and $0.31.
• Stock-based compensation of $0.05 per diluted share and intangible asset amortization of $0.02 per diluted share.