EMC Thursday reported financial results for the second quarter of 2005, achieving double-digit, year-over-year revenue growth for the eighth consecutive quarter. EMC said its growth was once again driven by sales of its midrange storage systems and by its services business.
EMC reported US$2.34 billion in revenue for the quarter, up 19 percent over the same period last year. Net income for the quarter was US$293 million, 52 percent higher than the US$193 million it reported for the second quarter of 2004.
EMC CEO Joe Tucci said in a statement that the company is committed to strengthening and expanding its product portfolio this year. EMC is scheduled to release the seventh generation of its high-end Symmetrix array this fall, although sources have said it may come even earlier.
EMC Symmetrix revenue was up this quarter, growing 4 percent year over year and sequentially. That compares with a 5 percent sequential drop in revenue last quarter. EMC's midrange Clariion sales cooled off a bit during the quarter but remained a star performer, with 32 percent revenue growth over the previous quarter. Sales of the midrange array have now grown by at least 30 percent for 10 consecutive quarters.
Given the company's solid showing in the quarter, Kaushik Roy, an analyst at Susquehanna Financial Group, said he was surprised EMC is forecasting flat revenue growth for the next quarter. "Typically, they'd [project] 2 percent to 3 percent growth for the September quarter. We're also sensing end demand is not that great," he said.
Roy said he doesn't believe EMC's flat growth projections have anything to do with new high-end and midrange products recently announced by Hewlett-Packard, IBM and Hitachi Data Systems. "They're executing well," Roy said, referring to EMC.
Bill Teuber, EMC's chief financial officer, said the software group reported 16 percent revenue growth in open, platform-independent software, while backup, recovery and archive software license revenue increased 28 percent. It represented the strongest performer within the EMC Software Group.
EMC subsidiary VMware saw record quarterly revenue of US$91 million, representing 93 percent leap year over year. Software license revenues were up 70 percent from the same period in 2004, while services, including maintenance and consulting, jumped nearly 200 percent, Teuber said.
"Our focus on driving profitable growth while gaining market share is working exceptionally well, as evidenced by our 11th consecutive quarter of meeting or exceeding our major financial targets," Teuber said.
Software license and maintenance revenue grew 26 percent from a year ago to US$832 million and represented 37 percent of total EMC revenue. Professional services, systems maintenance and other services revenue grew 26 percent to US$375 million during the quarter, Teuber said.