EMC Releases Preliminary Q1 Results
Growth Rate and Profitability Remain High, EPS $.02 Lower Than Consensus
Hopkinton, Mass.- Wednesday, April 11, 2001
EMC Corporation (NYSE:EMC) today announced preliminary results for the first quarter of 2001. EMC expects to report that total information storage revenue grew 37% compared with last year's first quarter, and total consolidated revenue grew 29%. Earnings are expected to be $0.18 per share for the quarter, $.02 below the current consensus of Wall Street estimates and 20% higher than the $0.15 per share earned in the year-ago first quarter. EMC plans to announce complete first-quarter results on the morning of April 19, 2001.
NOTE: EMC will host a teleconference live on the EMC Investor Relations Web site (www.emc.com/ir) today at 8:45 a.m. EDT. A replay of the conference call will be available by calling 703-925-2435; access no. 5152215. The replay will be available from shortly after the end of the conference call through April 18.
Factors contributing to EMC's growth rate included the continued high levels of demand for information storage and EMC's market-leading offerings, partially offset by tightened IT budgets and the effects of the economic slowdown on certain U.S. and European customers.
Joe Tucci, EMC President and CEO, said, "We continue to see companies collect and store information at an aggressive pace. Revenues in the first quarter ended up softer than anticipated because of some purchase hesitation from our customers. We found some customers reluctant to spend budgeted IT money, given the abundance of negative economic news. EMC's value proposition is centered on helping customers generate revenues, enhance profits, improve service, and save money. We are working diligently to show both current and prospective customers how we can help them through challenging budget constraints. Our opportunity is building on those trusted relationships and accelerating our leadership position in the fastest-growing major sector of IT."
Mike Ruettgers, EMC Executive Chairman, added, "While the economic situation has elongated EMC's sales cycle for the time being, we believe that widespread corporate re-budgeting for the year is now mostly complete. We expect that, coming out of the first quarter, most businesses have reduced growth expectations and budgets accordingly."
According to market researcher International Data Corporation, global IT budgets are expected to grow 9% in 2001, compared with 12% growth in 2000. Bill Teuber, EMC's Senior Vice President and Chief Financial Officer, said, "We feel that we can continue to grow at more than double the rate of overall IT spending for the year 2001, or more than 20%. We are confident that we can do this profitably and gain market share. We are focusing on opportunities for cost reduction, but we will also continue to invest in R&D, customer service, professional services and quota-carrying sales personnel. Factoring in these expenses on a revenue growth rate of over 20%, we expect modest EPS growth for the year 2001, and we expect these efforts will even better position us for 2002 and beyond. We are confident that EMC's execution on revenue generation and cost control will produce these results."
EMC's revenue categories contributed to the preliminary results of the quarter as follows:
Category Preliminary Q1
Y/Y Growth Rate Preliminary Q1
Results (millions)
Information Storage Systems 23% $1,564
Information Storage Software 73% 468
Information Storage Services 99% 232
Total Information Storage Revenue 37% $2,264
Other, including Aviion servers (52%) 81
Total Consolidated Revenue 29% $2,345
Ruettgers concluded, "We see three important takeaways from the first quarter. One, EMC has dealt with adversity before and responds to tough challenges better than most. Two, we have the largest and strongest sales force in the industry, we have added thousands of new feet on the street over the past year and we are still ramping up their productivity. Three, despite the economic downturn, EMC was still able to grow information storage revenues at a very healthy 37% rate and take market share in a profitable manner. The confidence the world places in the growth prospects for the information storage market is well founded. Information storage is the fastest growing major segment in IT spending. EMC is the leader in IT's best market, and we are solely focused on executing on this opportunity." |
