Despite the improvement at the top line during this years third quarter, EMCs headcount redundancies created by the companys acquisitions over the past 12 months weighed down operating profit during the quarter, Krans said. "While EMCs overall revenue increased by 19 percent year-to-year, the highest growth rate in more than a year, operating profit declined by 9 percent year-to-year, and operating margin declined to 12.2 percent," Krans said.
"Much of the decline in EMCs operating profit over the past year is due to the companys acquisition strategy, which focuses on retaining the current operations of its targets. To address the headcount redundancy and inefficiencies resulting from EMCs recent acquisitions, the company announced plans to reduce headcount."Krans said he views these reductions in a positive light and believes that EMC will need to hone its acquisition integration strategy planning to more quickly identify and capitalize on areas of overlap with future purchases. "Other software vendors, particularly IBM and Oracle, are able to efficiently purchase and integrate software vendors in a manner that minimizes the impact to cost structure, and EMC should follow suit," Krans said. EMC systems revenue in the third quarter was $1.3 billion, a 19 percent increase over the year-ago quarter. Software license and maintenance revenue grew 25 percent to $1.1 billion, and professional services, systems maintenance and other services revenue grew 7 percent year-over-year to $432 million. EMC completed the third quarter with $5.5 billion in cash and investments. EMC information storage revenues increased 14 percent compared with the year-ago quarter. EMC Symmetrix sales grew 21 percent. In the midtier, EMC CLARiiON revenues grew 18 percent over the year-ago quarter, driven by widespread customer and partner adoption of the new CLARiiON CX3 UltraScale systems. Security revenues for the full quarter, including the period in which EMC did not own RSA Security or Network Intelligence, grew 30 percent compared with the year-ago period, with both companies having record revenue during the quarter. VMware, an independent EMC subsidiary, had another record quarter and grew total revenues 86 percent year-over-year to $188.5 million. Check out eWEEK.coms for the latest news, reviews and analysis on enterprise and small business storage hardware and software.
"Much of the decline in EMCs operating profit over the past year is due to the companys acquisition strategy, which focuses on retaining the current operations of its targets. To address the headcount redundancy and inefficiencies resulting from EMCs recent acquisitions, the company announced plans to reduce headcount."