HOPKINTON, Mass. - July 20, 2004 - EMC Corporation (NYSE:EMC) today reported financial results for the second quarter of 2004, achieving its fourth consecutive quarter of double-digit year-over-year revenue growth and more than doubling net income compared with the year-ago period.
Total consolidated revenue for EMC's second quarter was $1.97 billion, 33% higher than the $1.48 billion reported for the second quarter of 2003. Net income for the quarter was $193 million or $.08 per diluted share, 136% higher than the $82 million or $.04 per diluted share reported for the second quarter of 2003.
Joe Tucci, EMC's President and CEO, said, "I was pleased with our overall execution and financial results in the second quarter. Clearly the highlight of the quarter was our strong double-digit year-over-year revenue growth and resulting market-share gains in each of our business lines. The main driver of this growth was strong execution of our information lifecycle management strategy and solutions, which are enjoying an excellent reception from our customers and the overall IT marketplace.
"I continue to believe the overall market environment for storage and information management technology is rich with opportunity yet challenging, as customers continue to demand more from IT providers. They are looking for broader 'best of breed' solution sets and better service and support, and they are uncompromising when it comes to improving the total cost of ownership and overall returns on their IT investments. We think our strategy and our portfolio are very well suited for this challenge."
Core EMC revenue, which excludes product and service revenue from EMC's Documentum, LEGATO Software and VMware businesses, grew 19% compared with the second quarter of 2003. Core EMC international revenue grew 24%, with double-digit revenue growth in each major geography including Europe, Asia and Latin America.
Bill Teuber, EMC's Executive Vice President and Chief Financial Officer, said, "Our extensive product and services portfolio and expanded market reach helped us to achieve our financial goals in the second quarter. We continued to drive revenue growth, improve gross margins and increase cash flow, while improving operating income to more than 12% of revenues -- putting us squarely on track to reach our mid-teens operating margin goal by the end of the year."
Second Quarter Highlights
EMC systems revenue grew 16% compared with the year-ago quarter as customers around the world aligned the value of their information to the appropriate platform within EMC's expanded family of tiered information storage. EMC's systems business in the quarter was led by EMC CLARiiON and EMC Celerra NAS platforms, which both had revenue growth of more than 40% compared with the year-ago quarter.
EMC software revenue increased 64% compared with the same period a year ago, buoyed by strong double-digit growth from sales of EMC's core storage software and the impact of the Documentum, LEGATO Software and VMware acquisitions. LEGATO Software delivered a record second quarter, driven by a 20% year-over-year increase in software license sales. Documentum also achieved double-digit year-over-year growth, with revenues increasing 14%.
VMware delivered record quarterly revenues in its second quarter as a separate subsidiary of EMC, as organizations turned to the virtual infrastructure software leader to virtualize industry-standard servers and desktops throughout the enterprise.
EMC services revenue grew 45% compared with the year-ago quarter, driven by increased software maintenance revenue, customer demand for information lifecycle management solutions and the impact of EMC's recent acquisitions.
EMC expanded its market reach through major new and enhanced partner agreements during the quarter. EMC announced it will resell Advanced Digital Information Corporation's (ADIC) tape library solutions to broaden its lineup of tiered networked storage; Langchao Electronic Information Industry Corp., Ltd., a leading server vendor in China, agreed to OEM the entire line of EMC CLARiiON products; Dell added EMC's LEGATO backup and replication software to its storage management offering; and VMware strengthened its relationships with systems vendors IBM and HP.
Business Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of any mergers, acquisitions, divestitures or business combinations that may be completed after the date hereof. The Business Outlook set forth in EMC's news releases dated January 22, 2004, April 15, 2004, and June 10, 2004, still represents EMC's current expectations unless specifically superceded by these or previously issued statements:
- Consolidated revenues for the third quarter of 2004 are expected to be around $2.0 billion.
- Diluted earnings per share for the third quarter of 2004 are expected to be $0.08 to $0.09.
- Research and development expenses, as a percentage of revenue, are expected to be around 11% for 2004.
About EMC
EMC Corporation (NYSE: EMC) is the world leader in products, services and solutions for information storage and management that help organizations extract the maximum value from their information, at the lowest total cost, across every point in the information lifecycle. Information about EMC's products and services can be found at http://www.emc.com.
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For further information:
EMC
Angelique van der Kroft, marketing manager T. + 31 (0) 30. 630.50.00 E. VanderKroft_Angelique@emc.com
For journalists:
Bennis Porter Novelli
Remco Plettenberg
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E. rplettenberg@bennispn.nl