This summary is based on the fourth quarter fiscal 2007 earnings call conducted by EMC Corp. (EMC) on January 29, 2008.
Management:
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Chairman, President, CEO: Joe Tucci
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Executive VP, CFO: David Goulden
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VP Investor Relations: Tony Takazawa
Key Investors Issues
- Earnings were $525.7 million or 24 cents a share, up 33% from $388.8 million or 18 cents in 2006.
- Revenues were up 19% to $3.8 billion.
- The firm spent $351 million to repurchase 16 million shares
Full Year Highlights:
- Net income was $1.67 billion or 77 cents a share, 43% higher than the prior year.
- Revenues were $13.2 billion, up 19% over 2006.
- The company returned a total of $1.45 billion to shareholders by repurchasing 89 million shares.
Fourth Quarter Highlights
Revenues were $3.83 billion, up 19% from $3.21 billion in 2006 on double-digit revenue growth across the company’s segments and its four major geographies.
- Earnings were $525.7 million or 24 cents a share, up 33% from $388.8 million or 18 cents in 2006 including 4 cents from VM Ware on revenue growth.
- The firm now does business in over 50 countries and revenue from international operations was up 23%.
- Centers of excellence have been established in Russia, China, India and Israel, expanding local presence and leverage the intellectual capital and economics available within these regions.
- In addition to the extremely strong sales force, the firm has focused in the last 12 months on strengthening the channel relationships and the velocity channel partner program is stronger than ever.
- Consolidated cash flow from operating activities was up 50% from last year to $979 million as inventory churns were 7.7, up from 7.0 in 2006 and DSOs which were 55 days.
- The firm spent $351 million to repurchase 16 million shares.
EMC Information Infrastructure Business:
- Revenues were $3.4 billion, up 15% and earnings were, up 23%.
- Operating cash flow was $895 million, up 62% and free cash flow was $688 million, up 98% from last year.
- The firm made investments in some startup businesses, such as Mozy, hired sales people for the BRIC and other high growth countries and for commercial business and paid out sales force compensation accelerated tied to revenue results.
Information Storage Business revenues were up 14% over last year, growing faster than the market and representing share gains.
- In the high end, Symmetrix revenues were up 12% on strong demand for the DMX4 system, which is the highest performance, most cost effective, secure, energy efficient and easy to use high end array on the market today.
- In the mid range, Clariion revenues were up 15%, achieved strong share gains in the mid tier storage market this year, driven by the strength of the product portfolio.
- The firm noted that customers wanted choice across fibre channel, iSCSI and ISP connectivity in the mid and low tier.
- The firm is well positioned with its Clariion CX3 dual protocol systems, the NS20 and NS40 multi-protocol systems which offer fibre channel iSCSI and NAS and the new AX4 comes in either fibre channel or iSCSI configurations.
In addition, the NAS business had a great quarter headlined by the Celerra NS20 products which had excellent results in its first full quarter of availability.
- The NS20 is shaping up to be one of the fastest growing products ever brought to market.
- Demand for backup and recovery solutions continues to grow and revenues from the software which includes the Avamar and network of products.
- Additionally, the trend towards backup to disk continues to gain momentum, while backup to tape is declining.
- A recent survey indicated that the number of customers offloading primary storage to tape will decline from 60-70% today down to 30-35% in 2009.
- Other trends in storage include demand for file based commercialization and model based resource management, resulting in double digit growth for the Rainfinity and Smart Software products.
Storage go to market capabilities:
- Storage product sales to commercial customers hit a $2 billion run rate this quarter and revenues were up 25% this year.
- During the period, Dell represented 12.6% of total revenues and within this total, Dell was about one-third of Clariion revenues and the balance came from a broad mix of EMC’s information storage, content management, security and VM Ware products.
- The firm was the first information storage provider to introduce enterprise class flash drive technology into high end systems in addition to several other new capabilities like virtual provisioning.
It introduced the new Clariion AX4 network storage system, a highly flexible and scalable SAN system for small and medium businesses that supports iSCSI or fibre channel SAN and works especially well in VM Ware environments.
- In October, the firm acquired Berkeley Data Systems, more commonly known as Mozy, which is an online backup and recovery service for desktops and laptops from remote Windows servers.
- The portfolio now expands across the consumer, mid tier and high end markets and products are known as the most reliable in the industry and supported by the best service organizations.
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Content management and archiving business realised strong growth, with revenues up 17% as license revenues were up 8% and maintenance and professional services revenues were up 25% due to enhancements and the overall competitiveness of the D6 product portfolio.
- The firm is the only content management provider that offers customers a comprehensive unified content management platform to manage all types of content across the enterprise within a common information infrastructure.
- The segment is in the process of integrating the document input management with business process management with document output management enabling the firm to handle a full life cycle interaction of information.
- On the input side, solutions are being moved from high volume scanning to multi function capture, which supports capture via scanning, via faxing and from electronic forms.
- The pending acquisition of Document Science will mark entry into the multi channel document output management.
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In the RSA information security business revenues were up 30% over last year as the firm is the only information infrastructure vendor with a dedicated security division with a breadth of solutions that address many areas of risk across the data center.
- The dedicated focus on information centric security and an ability to provide holistic solutions to risk management are very strong competitive advantages.
- Information is a top priority to customers and this is driving strong demand for information discovery and classification services and identity data security and security information and event management products.
- The RSA business benefited from EMC’s strong alliance partner network.
