This is a summary of the second quarter fiscal 2008 earnings call conducted by EMC Corporation ((EMC) on July 23, 2008
Management:
- Chairman, President& CEO: Joseph M. Tucci
- EVP, CFO: David I. Goulden
- VP, GIR: Tony Takazawa
Key investor issues:
- Revenue was $3.67 billion, an increase of 18% over the $3.12 billion reported in 2007.
- - Earnings were $377.5 million or 18 cents a share, up 12.9% from $334 million or 16 cents a share in the prior year.
- The firm repurchased around 9 million shares for $130 million.
Year to date highlights:
- Revenues rose 17% to $7.1 billion from $6.1 billion in 2007
- Net income was $646 million or 31 cents a share, down marginally from the prior year.
- Year-to-date repurchase of shares was about $850 million.
Second quarter highlights:
Revenue grew 18% to $3.67 billion, from $3.12 billion in the prior year, driven by the company’s strategic positioning and operational execution.
- IT spending will continue to grow, driven primarily by the need to manage the ever-growing volume of information.
- The challenge of dealing with this information overload is leading to a set of needs that EMC is uniquely able to address.
- Solid revenue growth continues to reflect the combined strength of the sales force and the increasing contributions from our growing network of channel, alliance, and service partners.
- Operating expenses were flat as a percentage of revenue and within this SG&A did grow a bit faster than revenues.
- The year-on-year growth in SG&A is principally due to the targeted investments in the faster growing markets, such as the commercial market place and the Brick Plus 13 countries.
Consolidated cash flow from operating activities was $619 million impacted by deferred revenues.
- Cash and investment were approximately $8.1 billion and about $4.6 billion of this is held in overseas operations and in VMware.
- Earnings were $377.5 million or 18 cents a share, up 12.9% from $334 million or 16 cents a share in the prior year.
- The firm repurchased around 9 million shares for $130 million.
Segmental Analysis:
- Information Infrastructure: revenues were $3.2 billion, up 14% with approximately 300 basis points coming from currency.
- The company had 7% growth in North America, which is a little slower than the 9% growth in first quarter mainly due to the enterprise segments.
- EMEA was up 24%, Asia-Pacific up 23%, and Latin America up 19%.
- Operating cash flow was $457 million and free cash flow was $270 million.
- Operating margin was 16.5%, up almost 30 basis points year-on-year.
- Gross margins were up 30 basis points, driven by continued improvement in product margins.
- Information Storage business: revenue reached $2.87 billion, an increase of 14% compared with the year-ago period.
- Product revenue was up 9% due to demand for the storage product portfolio across major geographies, with particular strength in commercial and overseas.
- The results show the demand for Symmetrix continues to be strong, with 10% growth on average in each quarter since the introduction of the DMX-4.
Symmetrix revenues were again strong, up 10% over second quarter of last year driven by continued customer demand for large-scale enterprise consolidation and improved energy efficiency.
- CLARiiON revenues were up 8% over second quarter of last year.
- NAS business had revenues over 50%, NS20 and NS40 products did well and gained share.
- Content Management Archive: revenues were up 18% over second quarter of last year due to by customer demand for EMC’s solutions for effective transactional content management that advance collaboration, compliance and risk-management initiatives, as well as improve business processes and increase productivity.
- RSA Information Security business: revenues were up 15% over second quarter of last year benefiting from strength in areas such as data-loss protection, identity protection and verification, and in security, information, and event managements.
- Professional Services generated revenues growth over 30% driven by unique services and underlying offerings of focus.
Business outlook:
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