Feeds

EMC loses half a BEEELLION on VCE ... but it's NOT what it seems

#consolidatedgrossmargins - 'nuf said

Choosing a cloud hosting partner with confidence

Comment EMC has lost a cool half billion dollars on VCE, the converged server-storage-networking biz it founded with Cisco, VMware and Intel.

VCE makes vBlocks, bundled Cisco servers and switches, EMC storage and VMware's hypervisor, which are packaged as single systems instead of four separate components: thus being much easier to buy, install and operate than equivalent systems built from separate components.

Stifel Nicolaus analyst Aaron Rakers has been looking at an EMC 10-K SEC filing for 2012 and writes:

EMC has invested a cumulative $676.1 million in the VCE joint venture since its inception in 2009, as well as $13.9 million in stock-based compensation – totalling $690 million. EMC continues to own 58 per cent of VCE’s outstanding equity … EMC’s consolidated share of losses was approximately 63.2 per cent in 2012 (vs. ~63.2 per cent 2011 and 58 per cent in 2011). EMC’s accumulated net losses from VCE have totalled $498.2 million.

That's near enough a half billion dollars. As for VCE as a whole, Rakers writes:

"This would imply total VCE losses at approximately $387.5 million in 2012, up from $331 million implied total VCE losses in 2011."

He says EMC recognised about $285.8 million in total sales from products and services to VCE in 2012 (vs. $133.9M in 2011). EMC and Cisco recently announced that the VCE partnership has reached $1 billion in annualised demand (or bookings).

EMC's 10-K says:

The losses recognised from the joint venture exclude our consolidated revenues and gross margins from sales of products and services to VCE, and any additional related selling expenses.

And further:

Our 2012 other income (expense), net primarily consists of our consolidated share of the losses from our converged infrastructure joint venture, VCE Company LLC, of $244.9 [million] ...

So $285.8m sales to VCE and $244.9m losses from VCE in 2012, making a net $40.9m profit or surplus. Unless our accounting math and understanding is way off-beam, VCE - cumulative losses not withstanding - looks a good business for EMC. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
'Kim Kardashian snaps naked selfies with a BLACKBERRY'. *Twitterati gasps*
More alleged private, nude celeb pics appear online
Wanna keep your data for 1,000 YEARS? No? Hard luck, HDS wants you to anyway
Combine Blu-ray and M-DISC and you get this monster
US boffins demo 'twisted radio' mux
OAM takes wireless signals to 32 Gbps
Google+ GOING, GOING ... ? Newbie Gmailers no longer forced into mandatory ID slurp
Mountain View distances itself from lame 'network thingy'
EMC, HP blockbuster 'merger' shocker comes a cropper
Stand down, FTC... you can put your feet up for a bit
Apple flops out 2FA for iCloud in bid to stop future nude selfie leaks
Millions of 4chan users howl with laughter as Cupertino slams stable door
Students playing with impressive racks? Yes, it's cluster comp time
The most comprehensive coverage the world has ever seen. Ever
Run little spreadsheet, run! IBM's Watson is coming to gobble you up
Big Blue's big super's big appetite for big data in big clouds for big analytics
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.