EMC Executive Vice President and CFO David Goulden Discusses EMC’s Fourth-Quarter 2009 Financial Results
EMC announced fourth-quarter 2009 financial results on January 26, 2010. EMC Executive Vice President and CFO David Goulden, discusses the results below. Additional information regarding EMC’s financial results is available here.
January 26, 2010
Can you summarize EMC’s fourth-quarter performance?
David Goulden: There are a lot of positives in today’s results. Beyond the financial metrics, we accomplished a lot in 2009. We maintained good focus on our goals and opportunities despite numerous economic and market distractions. We stayed close to customers and helped them through a tough time while other vendors cut back. We rolled out new, market leading products with the best quality in our history. We successfully implemented our biggest cost transformation program ever and strengthened our operational and financial position. We used our financial strength wisely to continue to invest in research and development and make strategic acquisitions – both of which will contribute to our ongoing success. Finally, we improved our customer satisfaction and loyalty metrics at an important time when customers are looking to solidify their true business partners.
How’s the global IT spending environment shaping up?
David Goulden: Overall, the environment in 2009 turned out pretty much as we anticipated and showed reasonable stability at the end of the year. While there is still uncertainty as customers evaluate their own business prospects and plans, we do expect 2010 to be better than 2009. We currently see IT spending growing between three and five percent in 2010. Given the compelling dynamics we see in our target markets, we continue to expect EMC’s total addressable market to grow faster than IT overall, probably something near six to eight percent. And lastly, given EMC’s strategic focus on the shift to the private cloud and our leadership position in the most important opportunities such as storage tiering, virtualization, security, next-generation backup, etc., we believe that EMC is poised to grow even faster than the rate of the addressable market and gain share.
You talk about EMC being uniquely positioned in information storage. How so?
David Goulden: EMC’s Information Storage business finished 2009 with very good momentum due to great products, compelling solutions and focused execution. We believe that we are poised to really extend our lead this year for three additional reasons: the move to virtualized data centers; the implementation of next-gen backup and recovery; and the evolution of unified storage. The business sits at the intersection of some of the most important trends in IT. As customers are beginning their journey toward private clouds, we are focused on helping them make the transition at their own pace. With our product portfolio, solutions and partnerships, EMC is uniquely able to help solve their problems of today, while at the same time, helping customers position themselves to meet their needs of tomorrow. As you can see from our fourth-quarter financial results and some of the recent success stories, we are certainly delivering what customers are looking for. We are confident that we will continue to gain share because EMC has the best, the broadest and the most integrated storage portfolio to meet customers’ needs both now and in the future.
How is EMC progressing against its cost reduction goals?
David Goulden: EMC’s cost transformation efforts are paying off and we certainly exceeded our 2009 target of $450 million in savings. We are truly moving our model to a new level of efficiency. Financial flexibility is a critical strength and competitive advantage for EMC, particularly in this unpredictable economy. Our financial strength allows us to continue to invest in our business during all types of economic cycles and you can expect us to continue this practice in 2010.
What can we expect from EMC in 2010?
David Goulden: It is a great accomplishment for EMC to have successfully weathered the worst recession in decades and to be exiting the year in our best operational and financial position ever. The combination of EMC’s vision, strategy, leading products and solutions, strong partnerships, increasingly efficient business model, great people and solid execution has made EMC stronger, more agile and more profitable. As we all know, well run companies are continually facing tradeoffs among trying to gain share, investing for the future and showing improving profitability. And, while the relative focus among these three tends to ebb and flow over time depending on the environment, the ultimate goal is always to show progress along all three metrics. In 2009, we were successful in putting in place an operational foundation that will enable us to more efficiently manage the balance among these three important goals. As a result, looking to 2010, we are very pleased that we will be delivering meaningful progress toward all three objectives. We are excited about our opportunities and we are confident in our ability to deliver a solid year including the triple play of market share gains, investment in the future and income leverage.
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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.