EMC numbers exceed company expectations 22 October, 2009 By Mark Cox

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"I am very pleased with EMC's solid financial performance in a challenging economic climate," said Joe Tucci, EMC Chairman and Chief Executive Officer. "While remaining closer than ever to customers, we made additional progress optimizing our cost structure, expanded our product portfolio, strengthened our partner ecosystem and positioned EMC to capitalize on four of the higher-growth, multi-billion-dollar market opportunities around fully virtualized data centers, cloud computing, virtualized desktops and clients, and next-generation backup and recovery. I am extremely proud of the EMC and VMware people around the world who achieved these results."

Like just about every other company out there, EMC revenues were down year over year. Third-quarter consolidated revenue of $3.52 billion declined 5 per cent compared with the year-ago period. Third-quarter 2009 GAAP net income attributable to EMC compares with $393.4 million or $0.19 per diluted share for the third quarter of 2008 and third-quarter 2009 non-GAAP net income attributable to EMC compares with $510 million or $0.24 per diluted share achieved in the third quarter of 2008.

EMC's Information Infrastructure business for the third quarter - comprising product and services revenue from Information Storage, RSA Security, and Content Management and Archiving - reached $3.03 billion, an increase of 8 per cent sequentially. The Information Infrastructure business was driven by strong sequential growth of the EMC Symmetrix high-end storage systems.

"Symmetrix being up 10 per cent is something to be proud of," said Canaccord Adams technology analyst Paul Mansky.

Of most interest to the channel is the company's CLARiiON business. For EMC as a company, there was some weakness here, but it is not the kind of weakness that is likely to drive many partners to despair.

"There was clearly some pressure on the CLARiiON line," Mansky said. The weakness in CLARiiONwas in the EMC-Dell, OEM relationship, and the catalyst there is Dells acquisition of Equallogic. But that was partially offset by EMC channel business in CLARiiON." So while EMC's weaker quarter in CLARiiON overall would be of concern to EMC investors, the specifics of that weakness are more likely to cheer channel partners, since their own business went up while the Dell OEM business went down.

Mansky noted one other element of concern in EMC's report. Tucci suggested on the call that he believes while IT spending will grow in 2010 it will be growing at below the rates of 2004-2007, even though the rate for 2009 is a depressed one.