Nieuwegein – October 19, 2005 – EMC Corporation (NYSE:EMC), the world leader in information management and storage, today reported financial results for the third quarter of 2005, achieving double-digit, year-over-year revenue growth for the ninth consecutive quarter. EMC’s third quarter growth was driven by its expanding services business, market-leading mid-tier storage systems, software for enterprise content management and backup, recovery and archive, and VMware’s virtual infrastructure software.
Total consolidated revenue for EMC’s third quarter was $2.37 billion, 17% higher than the $2.03 billion reported for the third quarter of 2004. Earnings per diluted share were $0.17, including $0.04 from a tax-related benefit, compared with $0.09 per diluted share reported for the year-ago quarter. Net income for the quarter was $422 million, including $106 million from a tax-related benefit, compared with $218 million reported for the third quarter of 2004. Excluding the tax-related benefit in the third quarter of 2005, earnings per diluted share were $0.13, up 44% from the year-ago quarter.
Joe Tucci, EMC’s President and CEO, said, “Few companies in our industry have been able to match the record of consistency and execution that EMC has achieved so far this year. Each of our major business segments and geographies continued to grow by double-digits during the third quarter, reflecting the power of our model, the soundness of our strategy and the excitement customers have about our expanding portfolio of solutions. We are in the midst of the most robust wave of new product introductions in our history, and customer response to our new products has been outstanding.”
“With each passing quarter,” continued Tucci, “information lifecycle management (ILM) is being adopted by more and more customers who see it as the most logical and efficient way to maximize the value of their information, answer the demands of compliance and get their IT costs under control. In the information infrastructure marketplace, our platforms and software are second to none, as is our ability to combine these products with consulting services to create complete ILM solutions.”
Systems revenue grew 15% in the third quarter compared with the year-ago quarter, to $1.09 billion. EMC grew its software license and maintenance revenues 16% to $865 million, representing 37% of total EMC revenues. Professional services, systems maintenance, and other services revenue, which represented revenue from EMC’s fastest-growing business line for the second consecutive quarter, grew 25% to $402 million.
Bill Teuber, EMC’s Executive Vice President and Chief Financial Officer, said, “We again outperformed the market, while driving our level of profitability higher. Our twelfth straight quarter of meeting or exceeding our major financial targets was marked by continued operating leverage, solid cash flow and better than expected bottom-line results. We significantly stepped up our stock buy-back efforts by spending $333 million on more than 24 million shares in the third quarter and will continue to be very active in the market again in the current quarter.”
Third Quarter Highlights
EMC platforms and related software revenue had double-digit growth in the third quarter, driven by demand for EMC’s mid-tier networked storage systems including EMC CLARiiON, EMC Celerra and EMC Centera. During the quarter EMC introduced new versions of its EMC Symmetrix and CLARiiON networked storage systems, providing customers with an unparalleled range of tiered information storage functionality and performance. Interest in the new platforms was high, suggesting strong demand for the new Symmetrix and CLARiiON systems during the current fourth quarter, their first full quarter of general availability.
EMC multi-platform software revenue also had double-digit revenue growth during the quarter, led by backup, recovery and archive software license revenue, which increased 39% over the comparable prior-year period. EMC again saw strong demand for EMC Legato NetWorker, EMC EmailXtender and EMC Replication Manager as customers continued to place a priority on information protection and compliance. Content management software also delivered double-digit revenue growth in the third quarter as customers deployed the EMC Documentum enterprise content management platform to manage their growing volumes of unstructured information.
Services revenue growth of 25% was driven by professional services engagements as customers sought help to plan, build, manage and support their ILM implementations. Professional services engagements involving data classification, migration and consolidation, along with business continuity, increased as customers enlisted EMC Consulting to aid in the management and protection of their increasingly complex information infrastructures.
VMware achieved record quarterly revenues in the third quarter, exceeding $100 million for the first time in its history and continuing to be one of the fastest-growing major software businesses in the world. The EMC subsidiary showed continued growth as customers increasingly standardize on VMware virtual infrastructure for their x86 production environments to solve server consolidation and containment, business continuity, software lifecycle and enterprise desktop computing demands. During the third quarter VMware, in conjunction with 15 partners, introduced two major new initiatives aimed at fostering open virtualization standards and accelerating the availability of the widest possible range of options and support for virtualization. Also during the quarter Sun Microsystems joined Dell, Fujitsu, Fujitsu Siemens Computers, Hewlett-Packard, IBM, NEC and Unisys in offering VMware virtual infrastructure on its servers.
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 give effect to (1) the provisions of the American Jobs Creation Act of 2004 or (2) the potential impact of any mergers, acquisitions, divestitures or business combinations that may be announced after the date hereof. These statements supersede all prior statements regarding Business Outlook set forth in prior EMC news releases.
Fourth quarter and full-year 2005
- Consolidated revenues for the fourth quarter of 2005 are expected to be between $2.67 billion and $2.69 billion.
- Diluted earnings per share for the fourth quarter of 2005 are expected to be between $0.16 and $0.17.
- Operating income as a percentage of revenue should reach the high teens in the fourth quarter of 2005.
- Consolidated revenues for 2005 are expected to grow at approximately 17%.
About EMC
EMC Corporation (NYSE: EMC) is the world leader in products, services and solutions for information management and storage 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.
For further information:
EMC
Angelique van der Kroft, marketing manager
T. + 31 (0) 30. 630.50.00
E. VanderKroft_Angelique@emc.com
For journalists:
Porter Novelli
Remco Plettenberg
T. + 31 (0) 20. 543.76.00
E. rplettenberg@porternovelli.nl