This summary is based on the first quarter fiscal 2008 earnings call conducted by EMC Corp. (EMC) on April 23, 2008.
Management:
Chairman, CEO and President: Joe Tucci
CFO and EVP: David Goulden
VP, IR: Tony Takawaza
Key Investor Issues:
- Q1 non-GAAP EPS rose 28% to 23 cents from 18 cents in Q1 of 2007.
- Q1 revenues were $3.47 billion versus $2.98 billion in the year ago quarter.
- The company repurchased about 36 million shares for $557.2 million during the quarter.
First-Quarter Financial Highlights:
The systems revenue for the quarter increased 10% from a year ago levels.
- The systems revenue represented 41% of the consolidated Q1 revenue.
- The software license and maintenance revenue rose 18% and accounted for 41% of the total revenue.
- Other services revenues grew 30% and contributed 18% of the consolidated revenues.
- During the quarter, Dell represented approximately 12.5% of the company’s consolidated revenues. Dell was about a third of client revenues and the balance was from a mix of EMC’s information storage, content management, and security and VMware products.
- The company currently has the best storage products offering in its history and also has the broadest and most integrated portfolio of information products and solutions in the market place.
Geographically, the revenue from North America grew 14% versus the same period in the previous year.
- The North America revenue represented 57% of total Q1 revenue.
- The revenues from operations outside of North America firmed 21% year-over-year, helped by double-digit revenue growth in each of the company’s Europe, Middle East and Africa (EMEA), Asia-Pacific and Japan (APJ) and Latin America regions.
The Q1 GAAP net income was $268.8 million.
- This included a $79.2 million non-cash charge for in-process R&D resulting from acquisitions completed during the quarter.
- Excluding this charge, net income was $348 million or 16 cents per share.
- The non-GAAP Q1 net income, excluding the in-process research and development (IPR&D) charge and other items was $477.3 million or 23 cents per share.
- This was 28% higher than the non-GAAP EPS of 18 cents for the year ago period.
- The Q1 GAAP earnings include 4 cents for stock-based compensation, 2 cents for intangible amortization and 4 cents of IPR&D expense associated with the acquisition of Pi Corporation.
- Adjusting for the IPR&D expense, Q1 EPS were 16 cents, an increase from 15 cents in Q1 of 2007.
During the quarter, the company generated operating cash flow of $918.3 million.
- This is an increase of 14% compared with the same period last year.
- The free cash flow for the quarter was $717.5 million. This represents a 22% year-over-year increase.
The company ended the quarter with a strong cash position.
- The cash and cash equivalents were about $7.9 billion as at close of the quarter.
- An estimated $4.2 billion of the amount is held in the overseas operations and in VMware.
- The company has no collaterized debt obligations, no collaterized loan obligations and no structured investments vehicles in its investment portfolio.
- Within the $7.9 billion, only $274 million were in auction rate securities which are issued by government agencies, educational institutions and municipalities.
During the quarter, the company returned value to shareholders by leveraging a strong cash position, spending about $557.2 million to repurchase approximately 36 million shares of the company.
- According to the management, this completed the company’s $2 billion share repurchase plan it embarked upon in January 2007.
- The company recently increased the share repurchase authorization by 250 million shares.
