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By | Chris Mellor 27th January 2009 16:25

EMC profits down - but it is a profit

Early cost-cutting helps save the day

Looking at the final quarter and full year numbers, laid-off EMC workers could be thinking that they didn't need to be fired at all. The company made a full year profit (GAAP net income) of $1.35bn, $288m of that in the final quarter, when demand dropped like a stone.

Final calendar quarter 2008 (Q4 08) revenues amounted to $4.02bn (Q4 07: $3.83b); up five per cent year-on-year, with net income per share being $0.14 (Q4 07: $0.24/share). If we strip out VMware's Q4 08 revenue of $515m we're left with $3.56bn pure EMC revenues, up two per cent year-on-year. Stripping out VMware's net income leaves EMC earning net income of $177m in Q4 08.

EMC's consolidated full year 2008 revenues were $14.88bn (fy 07: $13.23b) with net income of $1.35b or $0.14/share (fy 07: $1.67bn and $0.77/share). Stripping out the VMware results for the full year we're left with pure EMC revenues of $12.98bn and net income of $1.06bn. These figures aren't that bad at all. Of course net income has gone down but profits are still being made; net income representing 8.2 per cent of revenues in this poor year, and five per cent in the final hellish quarter, are not to be sneezed at.

The three sector revenue amounts for EMC in the full year were:

- Storage: $11.6bn (fy 07: $10.6bn)
- Content Management and Archiving (CMA): $785.7m (fy 07: $773.2m)
- Security: $581.3m (fy 07: $525.3m)

The CMA area was not as weak as it seemed at the end of Q3. After a fall in revenues from Q2 08 ($204m) to Q3 08 ($188.1m), it picked itself up to record revenues of $208.4m in Q4 08 and a year-on-year revenue rise.

Joe Tucci, EMC's CEO, put his best foot forward and said these were record results, achieved in spite of obstacles provided by the recession. The company controlled its spending carefully, he said, throughout 2008 and will "continue to streamline operations, reduce costs and strengthen the efficiencies of (its) global operations”.

He intends that EMC should gain market share this year and extend its technology.

EMC points out that its 2009 cost base should be $350m lower than in 2008 because of restructuring and operational efficiencies.

The company thinks overall global IT spending will decline 5-9 per cent in 2009 compared to 2008. It reckons spending in the areas in which it sells products and services will be relatively higher but will be biased towards the second half of the year. It is not offering any revenue guidance for the current quarter or full year because times are so uncertain. ®

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