Hopkinton, Mass.- Tuesday, October 19, 2004 - EMC Corporation (NYSE:EMC) today reported financial results for the third quarter of 2004, achieving its fifth consecutive quarter of double-digit year-over-year revenue growth.
Total consolidated revenue for EMC's third quarter was $2.03 billion, 34% higher than the $1.51 billion reported for the third quarter of 2003. Net income for the quarter was $218 million or $.09 per diluted share, 37% higher than the $159 million or $.07 per diluted share reported for the third quarter of 2003.
Joe Tucci, EMC's President and CEO, said, "We again achieved solid, balanced performance in a spending environment that continues to improve at a steady but modest pace. In each of the first three quarters of 2004, we have grown revenues almost three times faster than our overall addressable market. Clearly, our focus on information lifecycle management is influencing and improving how customers manage and store information, as well as setting the agenda for our industry as a whole."
Core EMC revenue, which excludes revenue related to EMC's Documentum, Legato and VMware acquisitions, grew 19% compared with the third quarter of 2003. All of EMC's major geographies recorded double-digit core revenue growth, with each of EMC's international regions gaining more than 20%.
Bill Teuber, EMC's Executive Vice President and Chief Financial Officer, said, "We have now met or exceeded our financial goals for eight consecutive quarters. During the third quarter, our gross and operating margins continued to expand, and our already strong balance sheet got even stronger. Cash and investments exceeded $7 billion for the first time in the company's history while we remained active in the market, buying back $108 million of our stock during the quarter. I am particularly pleased with the returns we are seeing from investments made to broaden our product portfolio and expand our customer reach, which have allowed us to penetrate more deeply into high-growth markets."
Third Quarter Highlights
EMC systems revenue grew 18% compared with the year-ago quarter as customers of all sizes aligned the value of their information to platforms within EMC's expanded family of tiered information storage.
"Our commitment to developing the market's most economical, functionally rich mid-tier systems and software is clearly paying off," commented Tucci. "Our traditional enterprise customers, along with our rapidly growing base of small to medium-sized customers, are integrating these solutions into their ILM-enabled infrastructures. In the third quarter, our CLARiiON, Centera and NAS (network attached storage) businesses collectively grew well over 50%."
EMC software license revenue increased 56% compared with the same period a year ago, driven by the Documentum, Legato and VMware acquisitions and double-digit growth from sales of EMC's core storage software.
The newly formed EMC Software Group, which markets and develops platform-independent information storage and content management software, delivered consolidated revenues of $351 million in the third quarter as customers around the world implemented EMC software to reduce costs, streamline complex IT operations and handle explosive data growth. The major components of EMC Software Group, including core EMC multi-platform software, Documentum and Legato, each had double-digit revenue growth in the third quarter over the comparable year-ago quarter.
VMware, an EMC subsidiary, delivered record quarterly revenues of $61 million in the third quarter, an increase of more than 200% over the third quarter of 2003. With the introduction of VMware ACE in the third quarter, VMware again demonstrated its relentless innovation and aggressive technology leadership. VMware solves the problems of efficiency, flexibility and security with its comprehensive solutions for servers, desktops and test and development that provide an easy on-ramp to next-generation computing models.
EMC services revenue grew 48% compared with the year-ago third quarter, due to the impact of EMC's software company acquisitions, increased core software maintenance revenue and continued customer demand for information lifecycle management solutions.
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, June 10, 2004 and July 20, 2004 still represents EMC's current expectations unless specifically superceded by these or previously issued statements:
Consolidated revenues for the fourth quarter of 2004 are expected to be between $2.23 billion and $2.27 billion.
Diluted earnings per share for the fourth quarter of 2004 are expected to be $0.11 to $0.12.
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 www.EMC.com.
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