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EMC Doubles Draw on Software Licenses

EMC nearly doubled its first-quarter profits from a year ago, reporting a net income of $270 million on 11 cents per share compared to the $140 million from the same quarter a year ago.

Revenue for the first quarter was $2.24 billion, up 20 percent from the year-ago period.

Growth was spurred by software license and maintenance revenue, which rose 26 percent to $832 million, good for 37 percent of the company's total revenue, EMC officials said on a call.

EMC's software unit starred across the board in Q1 in terms of growth, posting revenues of $401 million, a year-over-year increase of 24 percent.

Officials attributed the growth to corporate needs to reduce operational costs and comply with government regulations, such as Sarbanes-Oxley, HIPAA and SEC 17a-4.

Backup and archive software license revenue grew the most during the quarter at 36 percent, followed by storage and management license revenue growth of 21 percent and content management license sales growth of 23 percent. EMC server virtualization subsidiary VMware reported $80 million in sales, a year-over-year increase of 104 percent.

Systems sales still reign at EMC, which sold $1.02 billion in the quarter. Although sales of the vendor's high-end Symmetrix line dipped 3 percent in the quarter, systems revenue grew 15 percent. This figure was powered by double-digit growth from the company's mid-range Clariion and specialized Celerra NAS and Centera platforms.

EMC President and CEO Joe Tucci said product demand boomed in March, making up for a slow February felt by several IT companies. He also said he expects the recent shortage in disk-drive manufacturing to correct itself in the second quarter of 2005.

The executive said he is confident that there is great demand for the Hopkinton, Mass., company's systems, software and services, based on conversations he had with hundreds of customers in the last few months.

"We feel that we're on exactly the right track," Tucci said. "ILM is addressing the real issues that customers have."

Tucci also alluded to one compliance regulation that has the entire corporate sector on its toes: Sarbanes-Oxley, which calls for stringent record retention. He expressed confidence that EMC's software portfolio will successfully help enterprises address the compliance mandates.

Looking forward, EMC CFO Bill Teuber said the company expects revenues for the second quarter of 2005 to be in the range of $2.33 billion to $2.35 billion on earnings per share of 12 cents. For the year, Teuber said the information management market is estimated to grow at around 7 percent to 8 percent.