EMC Reports Strong Quarter And Year, With Growth Across The Company

EMC's Clariion business was split almost evenly between EMC's direct-sales team, its indirect channels and Dell. However because of new models including ATA hard drives, and because of a strong adoption of EMC's information life-cycle management (ILM) strategy by customers, the company's direct-sales portion is growing the fastest, Teuber said.

On the software side, Teuber said Legato had revenue of $87 million for the quarter and $318 million for the year. Documentum revenue hit $81 million for the quarter and $289 million for the year. Both of these organizations had their best quarters ever, he said. "It's heartening to see these two companies have such a fantastic quarter despite the inherent instabilities due to the acquisitions," he said.

The EMC legacy software business did well in the second half of 2003, with revenue up 17 percent over the first half of the year, said Teuber. However, he said, an especially strong third quarter due to government contracts did have an impact on fourth-quarter sales revenue.

Overall, software sales, along with license and maintenance fees, accounted for 31 percent of EMC's revenue in the quarter, Teuber said. That figure climbs to 33 percent of the total when Legato and Documentum revenue are included, he said.

Revenue in the first quarter of 2004 is expected to be between $1.8 billion and $1.835 billion, Teuber said. The company is expected to earn 5 cents per share in the quarter, or 6 cents if costs related to the acquisition of VMware are not included, he said. Revenue for all of 2004 is expected to slightly exceed $7.8 billion, up around 25 percent compared with 2003. The company plans to pour about 12 percent of revenue into R&D this year, he said.

Joe Tucci, president and CEO of EMC, Hopkinton, Mass., said that during 2003 EMC kept its promises made early in the year to be profitable every quarter, have sequential revenue growth every quarter, grow faster than the industry, grow gross margins and grow earnings faster than revenue.

Next week, Tucci said EMC plans to introduce new software at Oracle World. And on Feb. 9, he said EMC will have what he called an "important" product launch focused on storage platforms.

For 2004, Tucci said he expects the economy overall to grow. Corporate IT spending should be up 3 percent to 4 percent over 2003, with storage leading the way with 6 percent growth. He also expects core EMC growth to be double that of the IT industry as a whole.

Those expectations are based in part on an expected strength in the growth of Tbytes of storage shipped, said Tucci. Before the dot-com bubble, Tbyte growth was around 60 percent year-to-year, but it bloomed to 100 percent during the bubble before crashing to about 40 percent after the bubble popped. However, he said, growth is on the upswing and exceeded 60 percent last year.

With the acquisitions last year of Legato, Documentum and VMware, EMC has changed its focus to be prepared for future challenges, Tucci said. "EMC has been saying storage will change more in the next three years than in the last 10 years," he said. "EMC has two choices: create the changes, or react to them."

As for future acquisitions, Tucci said anything is possible. "We're focused on swallowing what we already are chewing," he said. "But I will never say never."