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To: Mark Oliver who wrote (4777)	10/21/1998 11:27:00 AM
From: Mark Oliver	Read Replies (1) \| Respond to of 9256

EMC earnings surpass estimates By Reuters Special to CNET News.com October 20, 1998, 10:00 p.m. PT EMC announced its third-quarter earnings jumped 51 percent as it lengthened its lead in the market for data storage products for larger computer systems. The company said net income rose to $201 million, or 38 cents a diluted share, from $133 million, or 25 cents a share, in the year-ago quarter. The results were 2 cents ahead of the Wall Street consensus of 36 cents a share, based on a recent survey of brokerage estimates by First Call. Revenues hit $1 billion as growth accelerated 37 percent from the same quarter a year ago, making EMC one of only a handful of major U.S. companies listed in the S&P 500 Index that has continued to grow at that rate this year. In a conference call with reporters following the earnings report, chief executive Mike Ruettgers said that during the quarter the company continued to boost its share of the large-scale data storage systems market. "I do expect a line between winning and losing [information technology] suppliers to become more distinct in 1999," Ruettgers said. EMC is a prime beneficiary of the spending that goes into corporate data storage systems. Some 40 percent to 60 percent of the cost of an office computer system typically goes to pay for storage, far more than the separate costs for the hardware, software, and network equipment that complete a system. The company said revenue from its fast-growing storage software business rose 136 percent to $117.5 million and that the company was on track to meet its goal of $400 million in software revenues this year. Storage hardware systems sales, which account for 80 percent of total revenues, grew 28 percent to $792 million. The remaining revenues resulted from services and installation work. EMC, which is based in Hopkinton, Massachusetts, is poised to benefit from most of the major trends in corporate technology spending, Ruettgers said. New software systems that link key business operations, electronic commerce, data warehousing projects, and data consolidation all eat up huge amounts of storage capacity, spurring demand for EMC products, he said. As customers seek to fix their computers ahead of the Year 2000 date change, EMC also benefits from demand for the additional data storage capacity required to test the computers. EMC remains positioned to grow 30 percent or more in 1999 as new sources of demand for its data storage products continue to develop, and the company sees no sign of the computer spending slowdown that some companies have forecast. "For 1999 I'm continuing to be confident that our growth will continue at this rate," he said. Third-quarter gross profit margins as a percentage of revenues jumped to 52.3 percent from 46.6 percent. Growing demand for its products has allowed it to maintain profit margins far in excess of its industry rivals. "Everywhere we are competing we are gaining market share," Ruettgers said in response to a reporter's question. EMC has taken away business from International Business Machines and Hitachi in the mainframe storage systems market, Ruettgers said, and IBM and Sun Microsystems in the so-called mid-range storage market. EMC shares gained $1.25 to $59.06 in active composite afternoon trading on the New York Stock Exchange, close to their historic high of $63.50.