Storage infrastructure giant EMC continued its string of flush financial reports Jan. 29, showing record fourth-quarter and full-year revenue and strong year-over-year growth in profit, earnings per share and operating cash flow.
It was EMC’s 18th consecutive quarter of double-digit, year-over-year revenue growth. The financial rewards were sparked by double-digit revenue growth across the company’s Information Storage, Content Management and Archiving, RSA Information Security, and VMware Virtual Infrastructure business lines and its four major geographies.
One of the company’s hottest subsidiaries, virtualization market leader VMware, didn’t fare quite as well in the fourth quarter, even though its outlook is equally positive.
VMware’s stock value suffered a huge drop from $83 to $60.73 per share in after-hours trading Jan. 28, lost about 27 percent of its paper value-or about $8 billion-in a matter of hours because it reported fourth-quarter revenues that fell short of Wall Street expectations. VMware also forecast 2008 revenue growth of 50 percent, compared to 88 percent in 2007.
In response to the VMware slide, EMC saw its own stock dip 11.5 percent on Jan. 28. EMC closed at $15.89 per share on Jan. 29, down $1.02 on the day.
But the stock problems couldn’t erase the parent company’s good overall quarterly report. EMC’s total consolidated revenue for the fourth quarter of 2007 was a record $3.83 billion, an increase of 19 percent over the $3.21 billion reported for the fourth quarter of 2006.
During the quarter, EMC generated operating cash flow of $979 million-an increase of 50 percent compared with the same period a year ago-and free cash flow of $712 million, an increase of 78 percent year-over-year.
Total consolidated revenue for EMC’s full 2007 fiscal year was a record $13.23 billion, 19 percent higher than the $11.16 billion reported for the full 2006 fiscal year.
A breakout year for EMC
EMC Chairman, President and Chief Executive Officer Joe Tucci said during the earnings call that “2007 was truly a breakout year for EMC. We exceeded all of the aggressive financial targets we set out to achieve at the beginning of the year.
“The highly successful partial IPO of VMware clearly met its key goals. And we further organized around our ‘One EMC’ initiative to interlock and drive more technology and product integrations across our Information Storage, Content Management and Archiving, and RSA Information Security business units, making it much easier for our customers and partners to do business with EMC.”
David Hill, principal analyst of The Mesabi Group, told eWEEK that he believes EMC can indeed continue to sustain its high-pressure, breakneck financial pace.
“EMC is well-positioned in IT growth areas, such as the continuing growth of storage and server virtualization, with strong products and excellent service support as well as solid sales and marketing organizations,” Hill said. “Unless some external event affects its growth areas unexpectedly, EMC seems more than capable of keeping up the pace of record revenues each quarter.”
What new challenges does EMC face this year in the market?
“Large competitors such as HP, IBM, NetApp, and Sun continue to battle EMC on a number of business fronts and so each point of market share is well contested, yet EMC continues to do very well overall,” Hill said. “EMC should be able to meet any competitive challenge, but the state of the world economy may be a challenge.”
EMC’s storage market leadership and financials are impressive, Hill added.
“The ability to acquire and assimilate a large number of acquisitions over the past years as well as continuing to do well in internal development activities is really very commendable,” Hill said.