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EMC: Cloud, Big Data, Security Drive Strong Q1 Financials

EMC's top executives talk up growth in midrange storage sales, discuss a drop in high-end sales and give a peek at upcoming products.

EMC Thursday notched its ninth consecutive quarter of double-digit year-over-year quarterly growth in revenue, income and earnings per share.

The company attributed its triple play financial results to a combination of across-the-board product growth related to cloud computing, big data and security, as well as to a fast-growing indirect sales channel presence.

Joe Tucci, EMC chairman and CEO, said he was very pleased with the results. "I have always believed that starting out the new year strong is important," Tucci said.

[Related: EMC's Major Product Launch: From Entry-Level To Enterprise Storage ]

For its first financial quarter of 2012, which ended March 31, EMC reported revenue of $5.1 billion, up 11 percent over the $4.6 billion the company reported last year.

EMC also reported first-quarter income of $587 million, up 23 percent over last year's first-quarter income of $477 million. Earnings per share for the first quarter hit 27 cents, up 29 percent over last year's 21 cents per share.

David Goulden, EMC executive vice president and CFO, said EMC's first-quarter 2012 financials reflect how well EMC has done in addressing customers' primary requirements.

"Our strong results show that we are addressing the major trends in clouds, big data, and trust," Goulden said.

While EMC's high-end storage revenue dropped 10 percent over last year, that was due to an exceptional first-quarter sales in 2011 of 25 percent, making it a tough quarter to compare against, Goulden said. EMC expects high-end storage growth this year to return to its single-digit normal rate, he said.

Midrange storage revenue, on the other hand, grew 26 percent over last year, Goulden said. That was due to organic growth, not acquisitions, he said.

EMC has done particularly well in the channel in the midrange storage market, Goulden said. EMC's VNX product launch in January 2011 brought in almost 6,000 new customers. "Many of these were brought to EMC via the more than 2.000 new channel partners who have joined EMC since the launch," he said.

Goulden also said that EMC's top five channel partners saw their total EMC unified storage revenue grow 45 percent over last year.

EMC last week introduced its VSPEX reference architecture, which will offer ways to build converged infrastructure platforms including storage, compute, networking and virtualization technologies, with the VSPEX business going exclusively through the channel, he said.

NEXT: EMC's Isilon, RSA, VMware Sales


Other parts of EMC also showed strong growth over last year, including a near doubling of Isilon scale-out NAS storage sales, 19 percent growth in sales of EMC's RSA security technology and 25 percent growth in VMware sales over last year, as reported Wednesday.

The Vblock preconfigured cloud platform based on EMC storage and Cisco servers and networking built by VCE, a joint venture of those two vendors, saw demand more than double from last year, Goulden said. "Not only are new customers dying to try Vblocks out, [customers] are coming back with new orders," he said.

North America accounted for 54 percent of EMC's total sales, and sales to that market grew 11 percent over last year, Goulden said.

EMC's overall revenue growth of 11 percent over last year was much higher than the overall IT industry growth during that same period, Tucci said. For 2012, EMC expects overall IT spending to grow 3 percent to 4 percent, with storage growing faster and EMC's revenue growing even faster than that, he said.

During the question-and-answer period after EMC reported its first-quarter financials, Goulden said that hard-drive constraints from last year's Thailand floods, which destroyed a significant part of the world's hard-drive manufacturing, were still in play. However, he said, EMC was able to get enough drives to meet demand. EMC expects hard-drive supplies to remain constrained in the second quarter, he said.

When asked about cloud computing, Tucci said spending on private clouds will continue to be higher than spending on public clouds but that public cloud spending will grow more quickly.

Tucci also said that the hybrid cloud, where customers tie public and private clouds together so that private clouds can be utilized for things such as peak computing and test and development, also will grow in importance. "So it's not an either/or," he said.

NEXT: EMC's Project Thunder, Higher-End VMAX


EMC also gave a slight peek at what the company has in store in terms of upcoming new products.

Goulden said EMC expects to use next month's EMC World to unveil Project Thunder, which builds on the company's February introduction of VFCache PCIe Flash-based storage for use in servers. Project Thunder will take VFCache a step further by building the Flash-based storage into a networked appliance for improving overall storage performance, he said.

EMC also is planning to introduce a new version of its VMAX storage systems, which scale up to hundreds of thousands of Terabytes of storage and tens of millions of input/output operations per second.

Tucci said VMAX was introduced three years ago this month, and that customers are expecting higher-end versions. "The customers that are expecting that are not going to be disappointed," he said. "And it's going to happen soon."


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