EMC does double-digit growth thang again in Q2
Investors not impressed
EMC continued its role as a Tier 1 hardware standout during the second quarter, reporting solid jumps in both revenue and income.
EMC posted revenue of $2.34bn - a 19 per cent year-over-year rise from the $1.97bn reported one year earlier. Net income surged a stunning 52 per cent to $293m from $193m. As rivals such as IBM, HP and Sun Microsystems struggle to deliver consistent hardware results, particularly in storage, EMC marched on with its eighth consecutive quarter of double-digit growth.
"We continued to execute in the second quarter, resulting in revenue growth that we believe was more than twice the rate of the market," said CEO Joe Tucci. "EMC leads one of the fastest-growing segments of IT and it is clear we are gaining share. We're committed to strengthening and expanding our portfolio so we can meet even more of our customers' needs and open up new market opportunities."
Tucci, like many hardware firm CEOs, had his fair share of struggles in the post boom era but must be commended for pushing EMC along what now looks like a very successful strategy. Namely, EMC has continued to fund extensive hardware R&D while building out a higher-growth software portfolio. In 2003, some publications chastised Tucci for accepting a lavish pay package as the storage maker floundered. Now, "Diamond Joe" has made good on the mega-bonus.
Evidence of Tucci's sparkling hand appears in the second quarter results. Hardware sales grew 15 per cent to $1.1bn. Not bad. Software sales, however, surged a more impressive 23 per cent to $878m. Applications now make up 37 per cent of EMC's business. EMC brought in another $389m - up 26 per cent year-over-year - from its services unit.
But EMC, in some ways, became a victim of its own success on Thursday, as investors sent shares lower 4 per cent, at the time of this report. EMC cautioned that third quarter revenue would likely come flat compared to Q2. Shareholders seemed to want, nay expect, a more optimistic forecast. ®
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