EMC Executive Vice President and CFO David Goulden Discusses EMC's Q4 and Full-Year 2008 Financial Results
EMC announced fourth-quarter and full-year 2008 financial results on Jan. 27, 2009. EMC Executive Vice President and CFO David Goulden discusses the results below. Additional information regarding EMC’s financial results is available here.
January 27, 2009
How would you characterize EMC’s 2008 financial performance?
David Goulden: We are pleased with our execution and performance in 2008 and we achieved many of the goals we set for the company last January. We generated all-time record revenue through the breadth and depth of our solution portfolio, which is aligned with key IT priorities, and through the strength of our go-to-market model. And, by expanding our geographic reach and investing in new markets we generated more revenue outside of the U.S. than ever before.
As a result of our R&D investments, each of our business units released important new products, strengthening the competitiveness of our solutions and extending our market leadership across the board. We effectively reinvested in our business for future growth, while managing our spending carefully and delivering non-GAAP EPS leverage. We used our cash wisely to make acquisitions for our technology portfolio, to enter new markets and to repurchase stock while ending the year with the most cash in the company’s history.
What is EMC doing to manage costs?
David Goulden: Throughout 2008, we managed our costs and investments conservatively by carefully managing headcount growth, driving productivity and optimizing our non-people spend across the business. In addition to these efforts, at the beginning of this year we announced a restructuring program designed to further streamline the costs related to our Information Infrastructure business and improve the competitiveness and efficiency of our operations.
We expect the program to reduce our Information Infrastructure costs from our 2008 spend rate by approximately $350 million in 2009, increasing that savings to approximately $500 million in 2010. The program’s expected savings will come from both cost reductions and the transformation of several areas of EMC’s operational cost structure.
We designed this program to strike the right balance between achieving higher levels of efficiency and sustaining strong business agility and performance, without in any way compromising our ability to serve the needs of our customers. We remain very confident in our products, services and solutions and believe these changes to our cost structure will help us to ride out this period of economic uncertainty and also be in a position of strength when things get better.
How important is it to have a strong cash balance in this economy?
David Goulden: We ended Q4 with a record $8.8 billion dollars in cash and investments, $5.1 billion of which is held overseas and at VMware. We have a very strong cash position, we continue to manage our investment portfolio conservatively, and we believe it’s in very good shape. Financial flexibility is a critical strength and competitive advantage for EMC, particularly in this unpredictable economy. Our financial strength allows us to invest in research and development and maintain and grow our frontline sales and services forces, even during challenging economic cycles.
What’s required to thrive in tough times and emerge even stronger in the next growth cycle?
David Goulden: While 2009 looks to be a challenging year, we like our position on both defense and offense for this year and beyond. First of all, as customers evaluate their operating models and IT infrastructures for cost and efficiency improvements, we are very confident that we have the right product portfolio to help them meet their needs.
Secondly, the breadth and depth of our offerings are the most competitive they have ever been, and we will continue to increase our market leadership this year with new products and solutions.
Third, we have a solid financial foundation and strong cash position. And, we not only have a comprehensive program underway to reduce our cost base, but we also expect minimal increases in discretionary spending this year. As a result, we expect to have a much more efficient business with significant potential for operating leverage as the environment improves.
EMC Corporation (NYSE: EMC) is the world's leading developer and provider of information infrastructure technology and solutions that enable organizations of all sizes to transform the way they compete and create value from their information. Information about EMC's products and services can be found at www.EMC.com
This document contains “forward-looking statements” as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) our ability to protect our proprietary technology; (iv) risks associated with managing the growth of our business, including risks associated with acquisitions and investments and the challenges and costs of integration, restructuring and achieving anticipated synergies; (v) fluctuations in VMware, Inc.’s operating results and risks associated with trading of VMware stock; (vi) competitive factors, including but not limited to pricing pressures and new product introductions; (vii) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (viii) component and product quality and availability; (ix) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (x) insufficient, excess or obsolete inventory; (xi) war or acts of terrorism; (xii) the ability to attract and retain highly qualified employees; (xiii) fluctuating currency exchange rates; (xiv) the impact of any expense reduction initiatives; and (xv) other one-time events and other important factors disclosed previously and from time to time in EMC’s filings with the U.S. Securities and Exchange Commission. EMC disclaims any obligation to update any forward-looking statements in this document after the date of this document.