EMC Posts Solid Gains In Second Quarter - InformationWeek
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7/21/2005
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EMC Posts Solid Gains In Second Quarter

Sales of mid-range storage systems and VMware virtualization software show biggest gains.

EMC Corp. posted solid second-quarter increases in revenue and earnings on strong sales growth of its mid-tier storage systems, virtual infrastructure software from its VMware subsidiary, and services.

Revenue for the second quarter ended June 30 was $2.34 billion, up 19% from the same period one year ago. Net income for the quarter was $293 million, up 52% from a year earlier. Earnings per share were 12 cents, in line with Wall Street estimates.

EMC's midrange CLARiiON product revenue grew 32%, with the strongest growth in Europe and among small and midsize companies. Sales of EMC's high-end Symmetrix systems grew 4% in the second quarter. Platform software, including license and maintenance revenue, grew 24%, driven by customer demand for replication software for safeguarding information assets.

Growth in EMC's software group was driven by demand for data backup, recovery, and archiving software, where revenue increased 28% during the quarter as large businesses deployed EMC Legato NetWorker backup-to-disk software and EmailXtender to perform E-mail retention for compliance purposes.

Next Monday EMC will launch the latest refresh of its high-end product line, known as Symm7, said president and CEO Joe Tucci during a conference call. Symm7 will strengthen the company's position against its high-end system competitors, IBM and Hitachi Data Systems. "The market environment is robust enough, and we're executing well," Tucci said.

VMware achieved sales of $91 million in the second quarter, a year-over-year increase of 93%, driven by the proliferation of virtualization into x86 environments. But content-management software revenue, including EMC Documentum, was up only 1% to $39 million for the quarter. Storage-management software revenue also was relatively flat at $152 million, up 4%. Demand for storage-management software will accelerate as companies continue to consolidate their storage infrastructures, Tucci said.

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