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EMC touts future low-end storage products

EMC touts future low-end storage products

EMC will be announcing a new family of low-end storage products -- both above and below the Clariion AX150 it announced in April -- using partnerships with Intel and NEC.

"Our goal is to be a leader in low-end storage, too," said Joe Tucci, CEO of the company, during a conference call discussing second-quarter earnings. The AX150 is not sufficient, and an entire product family is needed, he said. The company's April reseller agreements with Intel and NEC hint at the company's direction, he said.

Tucci did not say when the new products would be available.

Tucci said he was "deeply disappointed" in EMC's quarterly earnings, adding that execution was not up to EMC standards.

Revenue for the second quarter of 2006 was US$2.57 billion, 10 percent higher than the US$2.34 billion reported for the second quarter of 2005. Net income for the quarter was US$279 million, or 12 cents per share, compared with second-quarter 2005 earnings per share of 13 cents. The company had expected to earn at least US$2.66 billion and 13 cents per share this quarter and issued a warning earlier this week that it would miss that target.

Tucci blamed the shortfall on the transition from the Symmetrix DMX2 to the DMX3. He said the company was overstocked with DMX2s and had insufficient inventory of the DMX3s. In addition, a number of customers bought the DMX3 along with several other products but stipulated that they all be shipped together, which meant that EMC did not realize the sales from those additional products as well, he said.

All new Symmetrix builds will be DMX3, Tucci said.

EMC was more successful in some of its nonstorage areas. For example, VMware revenue was up 73 percent and content management was up 79 percent. In general, EMC's acquisitions did well, which Tucci said was due to leverage.

Tucci also addressed the company's most recent acquisition, RSA Security. RSA's CEO, Art Coviello, will continue to lead the company, which will be in EMC's information security division, and it will retain its own specialized sales, marketing and development. RSA will continue to develop an independent security franchise in addition to looking for synergies with EMC, he said.

EMC also lowered earnings expectations for the year to US$10.8 billion, with earnings per share of 51 cents.


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