EMC Reports Strong Revenue, Income Growth

EMC, one of the last big IT vendors to fall with the end of the dot-com era, continues to be one of the leaders of the IT recovery coming off one of its best quarters in years.The Hopkinton, Mass.-based storage giant on Thursday reported strong revenue and profit growth for the first quarter of 2004, which ended March 31.

Revenue for the company was $1.9 billion, up 35 percent compared with the $1.4 billion recorded in the same quarter of 2003. However, that figure included revenue from three acquisitions that occurred since the end of the 2003 quarter: Legato Software, acquired in October; Documentum, acquired in December; and VMware, acquired in January.

Discounting the revenue from the acquisitions, EMC's core business still grew a respectable 21 percent year-to-year, EMC executives said.

Revenue for each of EMC's new divisions grew as well year-to-year, with combined revenue from Legato, Documentum and VMware up 30 percent compared with their results a year ago.

Overall, EMC had income of $140 million, or 6 cents per share, for the first quarter of 2004, compared with $35 million, or 2 cents per share, for the same quarter a year ago. The 2004 figure includes income from its three acquisitions.Of its three hardware platforms, sales of EMC's Clariion line of arrays and related software grew almost 31 percent compared with last year, said Bill Teuber, executive vice president and CFO at EMC. Clariion is the EMC line which solution providers are most likely to sell.

Sales through EMC direct, Dell and other solution providers all rose, Teuber said. However, he declined to offer any more specifics.

Clariion sales also rose 6 percent on a quarter-to-quarter basis, which Teuber said was unusual for a vendor. "Usually, sales drop 6 [percent] to 10 percent from fourth quarter to first quarter," he said.

Outlook for second quarter and beyond looks good, EMC executives said. Revenue for the second quarter is expected to be between $1.95 billion and $1.975 billion, with earnings expected to reach 8 cents per share. The company expects gross margins in excess of 50 percent for the entire year, with R&D expenses amounting to between 11 percent and 12 percent of revenue.

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