The storage giant’s revenue during the first quarter was up 19% year-on-year excluding the effect of its latest acquisition, and its operating income was up 63%, excluding one-time costs.
Recently, disappointing first quarter results from Storage Technology and IBM’s storage division have fueled some pessimism about the storage market.
But EMC’s CEO Joe Tucci went out of his way to counter this. I fully believe there is ample demand, opportunity and budget in the global [storage] marketplace, he said. We too saw a slow February, but activity picked up nicely in March, especially in the last three weeks, and especially in the US, Tucci said.
Three months ago EMC forecasted that the overall storage market would grow by 7% to 8% this year, and that its own revenue would grow twice as fast. Yesterday the company said it is confident of reaching the upper limits of that forecast, and even suggested that it may do better than that.
Including around one percentage point delivered by its recent acquisition of Smarts Inc, EMC talked of 17% to 19% growth when answering analysts’ questions at the end of its earnings call. For the second quarter this year, EMC is forecasting revenue of $2.33bn to $2.36bn, with $0.12 earnings per diluted share.
For the three months ended 31 March 2005, EMC reported revenue of $2.24bn, up 20% year-on-year, or 19% excluding revenue from Smarts. Net income was $270m, up 93% year-on-year, or 63% excluding the effects of restructuring charges incurred in 2004. EMC said currency effects benefited its top line by 2%.
Disk drives were in tight supply during the first quarter, but Tucci said that drive suppliers came through for us. He added: While we expect supplies to remain tight, we believe we will be OK in the second quarter as well. It is still our expectation that the situation will improve as we enter the second half of 2005.
Revenue from systems, or hardware, was 46% of total, while software accounted for 37% and services 17%. The fastest growing element of EMC’s wide product portfolio continues to be its VMWare server virtualization software, which saw a thumping 88% increase in license sales, year-on-year, and 104% overall revenue increase. The next fastest growth came from EMC’s midrange Clariion disk arrays and software, for which revenue was up 47%.
Revenue from EMC’s flagship Symmetrix array and software was down 3% year-on-year. EMC blamed this on unusually strong sales in Asia during the first quarter of 2004 that were not repeated this year.
The Symmetrix is still EMC’s largest single revenue earner, with total hardware and software revenue of $652m in the first quarter, compared to $419m for the Clariion, and $401m from the entire EMC Software Group that comprises Legato, Documentum, Dantz and Smarts.
