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April 28, 2009

EMC Q1 earnings dip on sales down 8% at $3.15 billion

Storage revenue down 13% to $2.36 billion

By CBR Staff Writer

EMC has reported a 20% decline in net income to $205.34m for the first quarter 2009, compared to $257.8m in the year-ago quarter, on revenue down 9% at $3.15 billion.

Operating income during the quarter fell 17% to $259.61m, while diluted EPS fell 17% to $0.10. Operating cash flow generated was $864m and free cash flow was $681m.

The company said product revenue fell 16% to $1.96 billion, while services revenue grew 5% to $1.18 billion. Its information infrastructure business revenue fell 12% to $2.7 billion, with storage revenue down 13% at $2.36 billion, content management and archiving revenue down 6% at $174.31m, and security revenue up 6% at $142.7m. VMware, which is majority-owned by EMC, contributed revenue of $470.4m, an increase of 7% compared to the year-ago quarter.

Geographically, US revenue was $1.64 billion, representing 52% of the total revenue, while international revenue, operations outside of the US, was $1.51 billion, representing 48% of the total revenue.

David Goulden, executive vice president and CFO at EMC, said: We are taking additional near-term cost reduction actions that will save EMC an additional $100m in 2009. We now expect to reduce EMC’s 2009 Information Infrastructure costs by approximately $450m from our 2008 spend, increasing to approximately $500m in 2010. We believe these near- and longer-term actions will improve our effectiveness and efficiency and help EMC ride out this period of economic uncertainty.

Looking ahead, the company expects second-quarter 2009 global IT spending to be flat compared to the first quarter of 2009, and the second half of 2009, stronger than the first half of the year.

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