EMC Executive Vice President and CFO David Goulden Discusses EMC’s First-Quarter 2010 Financial Results
EMC announced first-quarter 2010 financial results on April 21, 2010. EMC Executive Vice President and CFO David Goulden, discusses the results below. Additional information regarding EMC’s financial results is available here.
April 21, 2010
Can you summarize EMC's first-quarter performance?
David Goulden: EMC started the year with very solid results in the first-quarter. We achieved our second consecutive quarter of record revenue, high double-digit profit growth and all-time record quarterly free cash flow. These results speak to the strength of our leadership position in some of the most important areas of IT and to the power of our operational model. We clearly executed on our triple play in the first-quarter: we gained market share, we invested for the future, and we improved profitability. We are confident we will continue to execute in all three of these areas going forward.
What factors contributed to EMC's record first-quarter results?
David Goulden: First of all, based upon what we saw in the marketplace, we think IT spending looks to be on track with what we had been expecting – growing around three to five percent this year. In addition, customer activity and commentary is consistent with the view that our addressable market will grow around six to eight percent his year. A second factor this quarter was the continuation of some pent-up demand that we saw in the fourth quarter 2009. For EMC’s Information Infrastructure business, this strength was concentrated in the US storage business, especially in financial services, and while it is difficult to quantify, it was certainly a positive. As a result of these two factors, we think growth in IT spending and our target market for 2010 will end up at the higher end of our projected ranges. Third, and most important, we expected to gain a significant amount of share this year, and it seems pretty clear that we are off to a good start in this regard.
Can you talk a little about EMC's share growth?
David Goulden: Sure. EMC grew significantly faster than our target market in the first quarter for a number of reasons, including: our expanding role as a trusted partner with our customers, our leading technology in several of the hottest areas of IT today, our proven support and service to back up this technology, and our compelling vision and ability to execute on this vision. As a result, we are increasingly the best guide for customers’ journey to the private cloud, and we believe this competitive advantage is the major factor enabling us to show strong growth and gain share. And it positions us well to continue to gain share going forward.
EMC's information storage business had another strong quarter. What is driving its continued revenue growth?
David Goulden: As always, information growth continued to be a key driver. We also saw customers beginning new projects in their existing traditional infrastructures. Added to both of these was continued growth in the number of customers that are moving to virtual data center infrastructures. All three of these drivers benefited us in the quarter, as EMC is a trusted partner not only for customers’ requirements today but also going forward as they embark on their own journeys to the private cloud.
EMC and VMware are both strong and nicely aligned. How will this be leveraged moving forward?
David Goulden: The consolidated results represent the combined power of VMware virtual infrastructure and EMC information infrastructure. Together we are moving forward under a shared vision and strategic direction. Additionally, through complementary efforts, we are increasing affinity between the virtual and information infrastructures. This strategic alignment positions us well to execute on our triple play: to gain market share, to invest for the future, and to improve profitability.
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
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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.