EMC revenue up on storage sales, profit flat

Strong sales of storage, software boosted EMC first-quarter revenue, but profits were hit by stock-option expenses.

EMC said strong sales of its Symmetrix storage and content management and virtualisation software boosted first-quarter revenue by 14 per cent from the same period in 2005, but profits were hit by stock-option expenses.

Net income for the first quarter, ended March 31, was $US272.5 million compared with $US269.8 million for the year-earlier quarter.

The option expenses were due to the cumulative effect of changes in accounting rules. Had EMC included stock-option expenses in last year's first quarter, it would have earned profit of $US182.2 million.

Excluding the stock compensation and other expenses, EMC's net income for the first quarter of 2006 was $US380 million. This beat analyst forecasts.

Revenue for the first quarter was $US2.55 billion, up 14 per cent from $US2.24 billion a year earlier.

EMC's storage systems revenue grew 20 per cent from the year-ago quarter to $US1.23 billion.

This marked its strongest growth in that area in more than two years, the company said.

Revenue was driven by sales of its Symmetrix DMX-3 tiered networked storage, which comprised more than half of its total Symmetrix systems revenue during the quarter.

Software licensing and maintenance revenue grew 11 per cent to $US925 million, fuelled by sales of its Documentum enterprise content management and Smarts resource management software. Professional services, systems maintenance and other services grew 6 per cent to $US396 million.

EMC president and CEO, Joe Tucci, said earlier this year that the company was focused on making software and services a bigger part of the mix for the company. Sales for EMC subsidiary VMware, which provides virtualisation software, surged 64 per cent to $US131 million.

Tucci earlier this year predicted the storage market would undergo significant changes in 2006 due to the prevalence of emerging technologies and growth potential in new customer segments.

He said EMC would focus on three key areas in particular - security, model-based resource management and virtualisation.

EMC said disappointing sales of its backup and archiving software were a result of a shift in its sales force that allowed sales people who had only sold the archiving software to also sell content management software. This also contributed to the upswing in content management software.

EMC predicted revenue for the second quarter about $US2.7 billion, and in the range of $US11.1 billion to $US11.3 billion for the entire year.

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