EMC Gets Results

EMC ended 2006 on a strong note, with better than expected earnings and sales across all product lines.

Midrange hardware and software were two of the categories that carried EMC in the quarter, as the company continued its recovery from a rocky first half of 2006.

EMC CEO Joe Tucci said 2006 was “somewhat disappointing” and the company’s execution “choppy,” but he said the company is “in the best shape we have been in some time.”

Tucci also announced the company’s “intention not to acquire large companies in 2007,” and instead focus on integrating its many acquisitions of recent years. That said, Tucci said EMC would consider a large acquisition if a good opportunity came along.

EMC’s sales in the fourth quarter grew 19 percent year-over-year to $3.215 billion, ahead of Wall Street analysts’ consensus estimate of $3.17 billion, according to Thomson Financial. EMC earned $389 million in the quarter, 17 cents a share on a pro forma basis, a penny ahead of forecasts. For the full year, sales were up 15 percent to $11.16 billion.

EMC vice chairman Bill Teuber said Symmetrix sales grew 4 percent in the quarter and 8 percent for the year, the best showing for EMC’s high-end line since 2000. Midrange Clariion sales rose 18 percent. Dell accounted for a third of Clariion sales and 15 percent of EMC’s total sales. Backup sales were up 14 percent.

A few key software lines posted triple-digit growth, among them VMware, Smarts resource management and Rainfinity file virtualization. Tucci said he expects VMware sales to top $1 billion this year.

Overall, systems revenue grew 12 percent, software license and maintenance revenue increased 27 percent, and professional services, systems maintenance and other services revenue increased 20 percent.

EMC’s Information Storage business, which comprises storage systems, information management, information protection, resource management software and related customer and professional services, grew sales 9 percent from the year-ago quarter to $2.67 billion.

Content Management and Archiving sales grew 43 percent, and the Security Division (RSA) grew 26 percent to $114 million in its first full quarter. Tucci said EMC plans a security announcement later this quarter.

EMC said it expects 14 percent sales growth in 2007, to at least $12.7 billion.

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