EMC Executive Vice President and CFO David Goulden Discusses EMC's Second-Quarter 2009 Financial Results
EMC announced second-quarter financial results on July 23, 2009. EMC Executive Vice President and CFO David Goulden discusses the results below. Additional information regarding EMC’s financial results is available here.
July 23, 2009
How would you characterize EMC's second-quarter financial performance?
David Goulden: EMC achieved solid second-quarter results. Our continued focus on technology leadership, global sales and service execution and achieving maximum operating efficiencies, contributed to second-quarter revenue of $3.26 billion, an increase of 3% sequentially and second-quarter GAAP net income attributable to EMC of $205.2 million, an increase of 6% sequentially. This sequential revenue and profit growth is encouraging given the continued economic environment.
Can you comment on IT spending?
David Goulden: We believe that overall IT spending levels in the second quarter of 2009 were relatively flat with the first quarter; however, second-quarter spending seemed more stable and a little more predictable during the quarter. We attribute the stabilization to customers having more confidence in their IT budgets than they had at the beginning of the year. While the economic environment remains very tough and customers continue to scrutinize their spending very carefully, this stabilization is a positive sign.
Earlier in the second quarter, EMC launched the new EMC Symmetrix V-Max high-end storage system. How is it doing?
David Goulden: The reception from customers for the new Symmetrix V-Max system has been phenomenal. Customers are putting the Symmetrix V-Max system directly into production environments and these systems are achieving six nines of availability. To help you understand what six nines of availability means, this equates to an average of approximately 30 seconds of unavailability per system per year. Truly unprecedented performance! We are very confident that the Symmetrix V-Max is a highly differentiated, information storage platform that is going to strengthen and extend our leadership in the high-end of the storage market.
How is EMC progressing with its cost reductions?
David Goulden: Very well. You can see the benefits in our results. We have also maintained very disciplined expense control and have had some extra benefits from currency and some one-time improvements. Netting it out, this now puts us ahead of our planned cost reductions for 2009 and we have factored this into our outlook. For 2010, we still expect total cost savings of $500 million including the reversal of some cost savings such as the 2009 wage reduction. At this time, we are also utilizing our financial strength to improve our operating structure and invest in future high growth market opportunities. By effectively reducing costs, improving operating efficiencies and continuing to invest in new market opportunities we are reinforcing the resiliency of our business model for the long-term. We believe the net effect of these operational improvements will position us well for the next really big opportunities in IT.
Any insight into the rest of 2009?
David Goulden: Based on the more stable spending environment we saw in the second quarter, our first half performance and what we are seeing and hearing in the marketplace, we now have better visibility and more confidence in the second half of 2009. Although the spending environment will remain tough, we are encouraged that the environment has shown signs of stabilization. Our strategy and portfolio positions us exceptionally well in the market and we are pleased that we now have sufficient visibility to forecast our financial results for this year.
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
EMC, Symmetrix, Symmetrix V-Max are either registered trademarks or trademarks of EMC Corporation in the United States and other countries. All other trademarks used are the property of their respective owners.
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.