Press Release

EMC Reports 47% Growth in Storage Revenue, 55% Rise in Net Income in Record Third Quarter

Accelerating Growth Continues On Surging Demand for EMC Networked Storage Solutions

Hopkinton, Mass., Wednesday, October 18, 2000 - 

EMC Corporation (NYSE:EMC), the world leader in information storage, today reported sharply accelerated revenue growth and a 55% increase in net income for the third quarter of 2000, as organizations around the world continue to build their information foundations with networked storage solutions based on the EMC E-Infostructure.

Total storage revenue for the third quarter grew 47% compared with the third quarter of 1999 to $2.14 billion, marking EMC's highest rate of storage revenue growth in more than five years. This accelerated growth was achieved by strong performance across all major product areas, including 61% year-to-year growth in enterprise storage software revenue, 43% year-to-year growth in enterprise storage systems revenue, and 40% year-to-year growth in midrange storage revenue. Storage-related revenue represented 94% of EMC's total consolidated revenue during the third quarter.

Total consolidated results, which include both EMC's storage business and its Data General server division (formed after the acquisition of Data General Corp. during the fourth quarter of 1999), represented all-time record quarterly performance for EMC. Net income for the third quarter was $458 million, up 55% compared with the third quarter of 1999. On a diluted basis, earnings per share were $0.20 in the quarter, 54% higher than the third quarter of 1999 (adjusted for a 2-for-1 stock split effective June 2, 2000). Total consolidated revenue for the third quarter was $2.28 billion, 34% higher than the third quarter of 1999.

Mike Ruettgers, EMC's Chief Executive Officer, said, "We continue to achieve the accelerated growth in revenue and profitability that comes with providing customers with the most advanced, complete set of networked information infrastructure technologies available. There is no business or economic trend that is more constant than the growth of information - not only its sheer volume but its increasing importance to an organization's success. We saw excellent growth in all major geographies, led by the Asia Pacific region, where storage revenues grew 130% year-over-year. Storage revenues grew 62% year-to-year in Latin America, 41% in North America, and 39% in EMEA (Europe, Middle East and Africa). We undoubtedly gained market share again during the quarter, not only in the overall market for storage but also in each of the market segments we have identified as EMC priorities."

The networking of storage continued to be a major growth driver during the quarter. EMC is the leader in designing and deploying networked storage solutions and the only company able to provide integrated SAN and NAS implementations. SAN (storage area network) revenue was $480 million in the third quarter, up nearly fivefold compared with the year-ago quarter, as EMC extended its market lead in this rapidly growing area with the widespread acceptance of the EMC Enterprise Storage Network (ESN). Revenue from network-attached storage (NAS) nearly tripled from last year's third quarter to $133 million, as EMC continues to be the fastest-growing participant in this segment on the strength of its Celerra File Server, the leading enterprise-class NAS connectivity solution. Revenue from EMC CLARiiON midrange storage increased 40% to $165 million, the best quarter in CLARiiON's history.

EMC's balance sheet also continued to strengthen, with cash and investments increasing to $4.45 billion at the end of the quarter.

Other highlights of the quarter included the initial public offering of McData Corporation, a subsidiary of EMC and the leader in enterprise-class SAN connectivity systems; the announcement that EMC Celerra File Server achieved ratings of at least triple the performance of the closest competitive NAS offerings, according to Standard Performance Evaluation Corporation; the fruits of joint engineering efforts with Oracle, Microsoft and Hewlett-Packard producing increased integration with EMC technology for the benefit of joint customers; the announcement of an alliance between EMC and Exodus Communications, Inc., that enables Exodus to offer EMC storage systems, software and services to its e-business customers; and the formation of a global technology alliance with SAS focused on the customer relationship management (CRM) market. EMC also was named one of the "World's Most Admired Companies" and one of "America's 100 Fastest Growing Companies" by FORTUNE magazine, earned CIO magazine's prestigious CIO-100 Award for superior customer relationship management, and was the only IT supplier to receive General Motors' Supplier of the Year award.

EMC Corporation (NYSE:EMC) is the world leader in information storage systems, software, networks and services, providing the information infrastructure for a connected world. Information about EMC's products and services can be found at http://www.emc.com.
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