EMC Rides VMware To Strong Q13:12 PM EST Wed. Apr. 20, 2011
EMC on Wednesday reported its strongest-ever first quarter revenue and earnings, which the storage giant attributed to continuing demand for its information and virtualization technologies and strong growth in international markets.
Those strengths were evident across nearly the company's entire product line, including its high-end Symmetrix products, its entry-level VNX and VNXe family, and its VMware, RSA security, and other businesses.
EMC said revenue for its first quarter of 2011 reached $4.6 billion, up 18 percent over the $3.9 billion the company reported during for its first quarter of 2010.
Income for the quarter reached $477.1 million, or 21 cents per share, up 28 percent compared to last year's earnings of $372.7 million. These figures exclude earnings from VMware, in which EMC is the majority shareholder.
EMC's core storage revenue rose 17 percent over last year, including a 20 percent jump in product sales and an 11 percent jump in services, EMC reported. This includes a 25 percent growth in high-end Symmetrix sales, as well as strong growth in its midrange products including its new VNX and VNXe SMB storage appliances, EMC said.
EMC also reported an 8 percent growth in its RSA security product and services revenue, a 15 percent growth in its information infrastructure product and services revenue, and a whopping 33 percent growth in revenue and services from VMware.
The only part of EMC's business to show weakness was its Information Intelligence group, which includes its Documentum document management business and its Greenplum data warehousing appliances. Total product and services revenue for the group fell 10 percent over last year.
North America still remains EMC's biggest market, accounting for 54 percent of the company's total revenue. The U.S. accounted for 51 percent of EMC's total revenue. However, the 12 percent growth reported for both U.S. and North American sales was relatively weak compared to the rest of the world, as EMC reported a 21-percent growth in EMEA (Europe, Middle East, and Africa), a 28 percent growth in Latin America, and a 43-percent growth in Asia-Pacific-Japan.
Looking forward, EMC expects all of 2011 to be a very good year for sales and earnings. EMC said it expects revenue for 2011 to reach about $19.6 billion, up 15 percent over the $17.0 billion it reported for 2010. Income is expected to reach $2.5 billion, or $1.09 per share, in 2011, up 32 percent from the $1.9 billion, or 88 cents per share, it reported in 2010.
Michael Bauer, an analyst with FBR Capital Markets, wrote in a research paper after the Wednesday EMC analyst call that EMC's guidance was the same as it provided three months ago, which may be disappointing to some observers given the strong first quarter results.
"That said, we are not in that camp as we believe EMC conservatism over 1H (the first half of the year) sets the name up well for the second half of 2011," Bauer wrote.
Bauer wrote that investors over the next months should start giving credit to EMC for its accelerated storage growth cycle.
"We believe that while storage is a mature industry, the move toward virtualization within the data center puts EMC in the driver's seat to take advantage of this next-generation technology shift given the company's massive installed base, brand awareness, expanding product breadth, and unique approach to the market," he wrote.