EMCs Software Revenues Jump 64 Percent

The storage giant's second-quarter profits more than double to $193 million thanks to strong software sales.

Buoyed by its commitment to deliver software-rich information lifecycle management products to storage customers, EMC Corp.s second-quarter earnings showed a dramatic 64 percent increase in software sales from one year ago.

EMC reported results of $1.97 billion in total consolidated revenue for the second quarter during a call with financial analysts on Tuesday. The figure represents a 33 percent increase from the $1.48 billion reported for the second quarter of 2003. Net income for the second quarter totaled $193 million—136 percent higher than the second quarter in 2003.

Much of that growth is directly attributed to strong performances by EMCs Clariion network storage system, which featured $326 million in revenues for a 43 percent increase year-to-year; EMCs Open Software portfolio; and VMWare virtualization technology, which accounted for $47 million at a 200 percent jump year-to-year, noted Joe Tucci, president and CEO of Hopkinton, Mass.-based EMC.

"Underpinning all this growth is a very strong market reception for our information lifecycle management strategies and solutions," said Tucci in the earnings teleconference. "Clearly, having a large cadre of hardware and software products that address customer information needs from the lower mid market to the very high-end enterprise market was key to our success."

EMCs multiplatform software revenue climbed 139 percent from the second quarter of 2003 to play a significant role in this years second-quarter earnings by notching revenues of $262 million. The category is of special interest to the newly formed EMC Software Group business unit in charge of EMCs Documentum, Legato Software, and Open Software operations.

Legato Software recorded a 13 percent sales increase, reaching $86 million in the second quarter of 2004. For its part, Documentum registered $78 million in sales for the quarter. Despite a 14 percent climb year-to-year in revenues, Tucci said Documentum must battle through sluggish large enterprise license sales cycles to slightly rebound and establish a stronger growth pattern next quarter.

Excluding product and service revenue from VMWare, Legato Software, and Documentum, core EMC revenue grew 19 percent from its second-quarter totals in 2003.

In the second quarter of 2004, EMCs systems revenues climbed 16 percent to $930 million from $804 million in 2003, as customers began the task of re-architecting storage infrastructure toward consolidation and a more concerted management approach. Services delivered by the storage behemoth showed a significant spike over that same 12-month span totaling $498 million for 52 percent growth from $328 million in the second quarter of 2003.

EMCs forecasted third-quarter outlook features consolidated revenues of approximately $2 billion. The storage maker is targeting full-year revenues of $8.1 billion and a full-year net income of $850 million, excluding a first-quarter charge of $25 million, officials said.


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