Security, Virtualization Drive EMC’s Growth

EMC reported first-quarter results Tuesday that beat Wall Street expectations, thanks to strong security and virtualization sales.

EMC’s VMware division grew 95 percent in the quarter, while its RSA unit grew 25 percent. The Information Storage and Content Management and Archiving divisions grew 8 percent and 3 percent, respectively.

Overall, EMC’s revenues in the quarter were up 17 percent from the year-ago quarter to $2.98 billion, the company’s 15th straight quarter of double-digit growth. Earnings of $312.6 million, or 15 cents a share, were also better than expected.

Sales growth of 30 percent in Asia-Pacific and Japan also boosted results.

In a statement, CEO Joe Tucci said EMC’s “greatest opportunity and competitive advantages lie in the value realized by our customers when our products come together in a unified information infrastructure to solve today’s information management issues, better leverage information’s value and reduce the costs associated with its explosive growth.”

On the company’s conference call, Tucci also said that EMC plans a software as a service (SaaS) offering soon.

Systems revenue, which was 44 percent of total first-quarter sales, grew 6 percent. Software license and maintenance revenue, which represents 40 percent of total revenue, was up 29 percent; and professional services, systems maintenance and other services revenue, which represents 16 percent of total revenue, grew 21 percent.

EMC’s Information Storage business, which includes revenue from storage systems, information management, information protection and resource management software and related customer and professional services, reached $2.4 billion, an increase of 8 percent.

VMware’s 95 percent year-over-year growth to $256 million put the division on target for more than $1 billion in sales this year. EMC plans to sell about 10 percent of VMware via an initial public offering (IPO) to unlock the fast-growing unit’s value.

The Content Management and Archiving business grew first-quarter revenue to $172 million, an increase of 3 percent. Maintenance and professional services revenue for the Content Management and Archiving business grew 30 percent.

Information Security revenues grew 25 percent to $120 million in the second full quarter of operation for the RSA division.

EMC shares were up 3 percent in morning trading today on the strength of the company’s earnings report.

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