EMC profit propelled by VMware's growth, IPO
- 26 October, 2007 08:15
Storage maker EMC's profit has increased dramatically compared to last year's third quarter. It was lifted again by continued growth of its VMware subsidiary and EMC's recent sale of a slice of the company.
Net income for the third quarter ending September 30 was $US492.9 million, or $US0.23 per diluted share. This was 77 per cent more over the same period a year ago, EMC said. Those figures included the sale of 6 million shares of VMware to Cisco Systems.
Excluding the VMware gain, EMC's net income was $US377.8 million, or $US0.18 per diluted share. Analysts predicted $US0.17. EMC, which acquired VMware in 2004 for $US635 million, said in February it would sell off 10 per cent of VMware in an IPO (initial public offering), which was completed in August. It said the money would go toward stock compensation for its employees as well as boost the stock price. Intel now also owns a stake in VMware.
VMware maintains a huge, 85 per cent market share for virtualisation software, which allows multiple operating systems to run on one piece of hardware.
The technology remains a hot area, since virtualisation enables servers to perform at a higher level, reducing the need for more servers. EMC, which has retained a majority stake in VMware, said third quarter revenue came in at $US354 million, 90 per cent higher than for the same quarter a year ago.
EMC said its Information Storage business reported 8 per cent higher revenue, backed by sales of its Clariion and Celerra networked storage systems plus other backup and recovery products.
RSA, EMC's security business, saw revenue grow 22 per cent over a year prior. Those gains were attributed to RSA's authentication business, consumer applications and event management business.