Press Release

EMC Reports Record Revenue And Earnings For Most Successful Quarter And Year Ever

Enterprise Storage Leader Posts Quarterly Earnings of $0.34 Per Share, Excluding One-Time Charge; Software Revenue Grows 85% to $822 Million For Year

Hopkinton, Mass., Wednesday, January 26, 2000 - 

 

EMC Corporation (NYSE:EMC), the world's leading provider of enterprise storage systems, software and services, today reported record revenue and earnings for its 1999 fourth quarter and fiscal year. These results include the operations of Data General, acquired by EMC on October 12, 1999, and exclude a one-time acquisition-related charge of $0.15 per diluted share recorded in the fourth quarter.

 

EMC Consolidated Results

 

Total revenue for the fourth quarter was $1.88 billion, 21% higher than the fourth quarter of 1998. Net income for the fourth quarter was $377 million, 38% higher than the fourth quarter of 1998. On a diluted basis, earnings per share were $0.34 for the quarter, compared with $0.25 for the fourth quarter of 1998. EMC recorded a pre-tax charge of $224 million in the fourth quarter, related to the acquisition and integration of Data General. The one-time charge includes $208 million in restructuring charges and $16 million in other one-time charges included in Cost of Goods Sold. The after-tax impact of the charge was $170 million or $0.15 per diluted share. After the charge, net income for the quarter was $207 million, and earnings were $0.19 per diluted share.

 

For the full 1999 fiscal year, EMC's revenue totaled $6.72 billion, 24% higher than 1998. Net income for the full 1999 fiscal year was 1.18 billion, 50% higher than 1998 (excluding charges). On a diluted basis, earnings per share were $1.07 for the year, compared with $0.73 for 1998 (excluding charges).

 

EMC Storage Results

 

EMC's record fourth quarter performance was highlighted by the continued strong growth of the broad portfolio of EMC Enterprise Storage products and services. Storage revenue for the fourth quarter was $1.66 billion, up 27% from the fourth quarter of 1998. This growth was fueled by continued strength in EMC's software offerings as well as industry-leading growth in market segments such as storage-area networks (SAN) and network-attached storage (NAS). Software revenue was a record $281 million in the fourth quarter, up 71% compared with the fourth quarter of 1998 and representing 17% of EMC's total storage revenue for the quarter. For the full year, EMC achieved software revenue of $822 million, 85% higher than 1998. In the SAN connectivity market, EMC Connectrix systems revenue was up 44% sequentially compared with the third quarter, establishing the industry's highest annual revenue run rate in this burgeoning sector. In the NAS market, EMC Celerra systems revenue grew sequentially at an industry-leading rate of 40% compared with the third quarter of 1999.

 

Mike Ruettgers, EMC's Chief Executive Officer, said, "EMC closed the decade with a fourth quarter that was our most extraordinary ever by any measure. Record revenue and earnings performance and increased profitability only begin to explain the impact that EMC Enterprise Storage is having on the networked information economy. We have created a market with no visible limits and set the standard for the future by delivering technology that solves the most difficult information management challenges and enables organizations to reach new customers in new ways."

 

Ruettgers continued, "This performance was achieved during a quarter in which we completed both the acquisition and successful integration of Data General into EMC; worked to build and maintain the confidence of a global customer base able to face the Y2K transition without flinching; and sold more intelligent storage to the rapidly growing e-business community than in the first three quarters of 1999 combined. More than 40 companies have already joined our new EMC Proven E-Infostructure program, which enables leading Internet customers to validate their infrastructures, and those customers alone purchased nearly 500 terabytes of EMC storage during 1999. The overall growth of our storage business was affected by the integration of CLARiiON midrange storage products into our worldwide distribution model, as Data General's traditional reliance on OEM sales for CLARiiON was shifted to EMC's more balanced model of direct and indirect sales."

 

Also during the quarter, EMC introduced EMC ControlCenter software to automate storage-related tasks; announced a major extension of its global alliance with Oracle Corp.; announced an agreement to acquire SOFTWORKS, Inc., a leading provider of storage and performance management software; was featured on FORTUNE magazine's new "e-50" index of the "Internet elite"; and teamed with Microsoft and other leaders at COMDEX to create and showcase the largest-ever Windows 2000 configuration.

 

EMC's acquisition of Data General Corporation was accounted for as a pooling of interests. Accordingly, all prior periods have been restated in accordance with GAAP to reflect Data General's historical results as if the acquisition had occurred at the beginning of the earliest period presented.

 

EMC Corporation, a Fortune 500 company based in Hopkinton, Massachusetts, is the world's technology and market leader in the rapidly growing market for intelligent enterprise storage systems, software, networks, and services. The company's products store, retrieve, manage, protect and share information from all major computing environments, including Unix, Windows NT, Linux and mainframe platforms. The company has offices worldwide, trades on the New York Stock Exchange under the symbol EMC, and is a component of the S&P 500 Index. For further information about EMC and its storage solutions, EMC's corporate web site can be accessed at http://www.emc.com.

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