EMC Q1 Earnings Call: What Partners Need To Focus On

Final Earnings Call?

EMC Corp.'s pending acquisition by Dell Inc. is rapidly approaching, and depending on how quickly the two IT giants can put the blockbuster $60 billion deal together, Wednesday could be the last time EMC publicly reports quarterly results.

For now, the Hopkinton, Mass.-based data storage giant is still on the hook to report earnings, which have been declining in recent quarters as its bread-and-butter storage hardware business is dinged by an increasingly competitive market.

Dell and EMC expect the merger to close between May and October, and EMC's annual EMC World conference is scheduled for May 2. Here are some things to watch for Wednesday as EMC reports first-quarter results.

The Outlook For Virtustream

Look for an update on EMC's Virtustream cloud services business and how it may fit into Dell's ecosystem. In January, EMC Chairman and CEO Joe Tucci said EMC had moved its cloud-based commercial object storage service business, as well as its managed services business, out of EMC Information Infrastructure and into Virtustream. The move made Virtustream, which EMC acquired about a year ago, a $100 million-a-quarter revenue generator focused on complex, mission-critical business applications. The move also signaled EMC's realization that Virtustream didn't need VMware as much as EMC thought it might. VMware, which is 81 percent owned by EMC, pulled out of a joint venture with EMC on Virtustream just before the reorganization.

Dell VMAX Sales Pact

It's been nearly three months since Dell segment teams began reselling EMC's bread-and-butter VMAX solution. At the same time, EMC announced that it was re-architecting the VMAX line to work optimally with next-generation flash storage technology, and introduced all-flash versions of both VMAX and its high-performance, rack-scale DSSD solution. Look for word on how the new arrangement is panning out and how EMC execs expect VMAX to fit alongside Dell's Compellent and EqualLogic storage lines.


EMC certainly benefits from VMware's strength as a leader in the cloud and virtualization market. VMware's strong growth helps take the sting out of declines in EMC's traditional hardware business, but VMware is going through its own changes, namely refocusing its vCloud Air hybrid cloud unit more narrowly on specialized cloud and software services. That change comes with the layoff of about 800 employees.

How's The Streamlining Going?

EMC in January began an aggressive $850 million cost-cutting program that includes an undetermined number of layoffs, and the divestiture of some assets. The cuts were a way for the company to respond to challenges in the market and regain investor confidence amid negative earnings. Right away, the company made a significant number of cuts from its marketing department, as well as positions from manufacturing and operations. Look for an update on how big of an impact the cost-cutting efforts have had, and how much they've cost the company.