EMC Reports Second Quarter Results

(PresseBox) (HOPKINTON, ) EMC Corporation (NYSE:EMC), the world leader in information management and storage, today reported full financial results for the second quarter of 2006. The company's 12th consecutive quarter of double-digit revenue growth was highlighted by increased demand for VMware virtual infrastructure software and EMC Documentum® content management software.

Total consolidated revenue for the second quarter of 2006 was $2.57 billion, 10% higher than the $2.34 billion reported for the second quarter of 2005.

Net income for the second quarter of 2006 was $279 million or $0.12 per diluted share on a GAAP (generally accepted accounting principles) basis, which includes a charge of $0.02 per share for stock option expense, an additional $0.02 expense related to amortization of intangible assets and other equity compensation, and a $0.01 tax benefit, net of an in-process research and development charge. Excluding these items, non-GAAP earnings per share for the second quarter grew 15% to $0.15 per diluted share, compared with non-GAAP second quarter 2005 earnings per diluted share of $0.13, which excludes $0.01 per share for amortization of intangible assets and equity compensation expense. Additional information about EMC's net income is included within the supplemental tables released with today's second-quarter financial announcement.

Joe Tucci, EMC Chairman, President and Chief Executive Officer, said, "While our execution was not up to our own high standards, our business and customer demand for our products and solutions remain strong. The compelling evidence is the 14% year-over-year growth in new bookings, which speaks to the broad customer endorsement of EMC's information lifecycle management strategy and the great value customers see in our unique technology. We know what we need to do to sharpen our execution going forward and will focus our efforts on both EMC's short-term performance and our company's long-term growth and opportunity."

"EMC has the most comprehensive information infrastructure portfolio in the industry, spanning platforms, software, services and solutions," Tucci continued. "In many of these areas, we delivered strong performances in the second quarter. For example, VMware had a record quarter, our content management software business again delivered very strong double-digit growth, and license revenues from EMC Smarts software nearly doubled. Our strategy continues to be validated by the performance of our newer software businesses, which are driven by the technology and people that have joined EMC through acquisition."

Systems revenue in the second quarter was $1.15 billion, an 8% increase over the year-ago quarter. Software license and maintenance revenue grew 14% to $997 million. Professional services, systems maintenance and other services revenue grew 9% year-over-year to $424 million.

EMC completed the second quarter with $6.3 billion in cash and investments. Year-to-date the company has spent approximately $1.5 billion to purchase EMC shares in the open market and to redeem $125 million in convertible debt.

Bill Teuber, EMC Vice Chairman and Chief Financial Officer, said, "We continued to leverage our strong balance sheet during the quarter, deploying cash to deliver value to our shareholders. We accelerated our buyback program and are well on our way to meeting our commitment to spend at least $3 billion on EMC share repurchases by the end of this year. We also continued to add to our technology portfolio and customer base during the quarter, buying five small yet strategic software and services firms, and announcing an agreement to acquire RSA Security, the leader in protecting and managing identities and digital assets."

Second Quarter Highlights

EMC's newer software businesses continued to show strong financial performance during the second quarter. Excluding the impact of Captiva, content management software license revenues grew 30%, reflecting the growing synergy with EMC's traditional information storage business and customer appreciation for the EMC Documentum suite of content management products. During the quarter, EMC Documentum eRoom and Documentum Business Process Management software each received the coveted AIIM E-DOC Magazine AIIM 2006 Best of Show Award for exceptional quality and significant ROI potential for customers.

EMC backup and archive software license revenue returned to double-digit growth, increasing 13% over the prior-year second quarter. Organizations continue to turn to EMC software products, notably NetWorker, not only to back up and protect, but also to more quickly and reliably recover their data with minimal disruption to business operations.

EMC Smarts resource management software license revenue growth continued to accelerate during the second quarter as customers transition to model-based resource management to pinpoint service-affecting problems automatically and calculate the impact of those problems in real time without human intervention. Major advancements for EMC's resource management business in the quarter included the announcement of the breakthrough EMC Smarts Storage Insight for Availability software for automating root-cause and impact analysis of availability problems across the fibre channel storage area network, and the acquisition of nLayers, which brings EMC the necessary insight into application behavior and all interdependencies within the IT infrastructure.

VMware, an independent EMC subsidiary, grew total revenues 73% year-over-year to $157 million, its highest growth rate in five quarters. VMware's exceptional growth reflects customers' increasing adoption and standardization on VMware Infrastructure and the success of its growing virtual appliance/ software life cycle and enterprise desktop businesses. VMware Infrastructure 3, which shipped in the last month of the quarter, added significant new hypervisor platform functionality as well as a suite of groundbreaking new virtualization-leveraging services including distributed resource management, high availability, and online agent-less backup. VMware launched the Virtual Desktop Infrastructure Alliance during the quarter, with more than 20 hardware, software and service providers joining the initiative focused on hosted and mobile enterprise desktop solutions. VMware continued its focus on industry standards during the quarter, releasing the virtual machine disk format (VMDK) for free and without license.

Business Outlook

The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not give effect to the potential impact of the announced acquisition of RSA Security Inc. or of any other mergers, acquisitions, divestitures or business combinations that may be announced or closed after the date hereof. These statements supersede all prior statements regarding business outlook set forth in prior EMC news releases.

- Consolidated revenues for the third quarter of 2006 are expected to be at or above
$2.66 billion.
- GAAP diluted earnings per share for the third quarter are expected to be $0.12.
Non-GAAP diluted earnings per share are expected to be approximately $0.16,
excluding a $0.02 charge for stock option expense and a charge of $0.02 for
intangible amortization and restricted stock expense.
- Consolidated revenues for 2006 are expected to exceed $10.8 billion.
- GAAP diluted earnings per share for 2006 are expected to be approximately $0.51.
Non-GAAP diluted earnings per share are expected to be approximately $0.68,
excluding a $0.09 charge for stock option expense and a charge of $0.08 for
intangible amortization and restricted stock expense.


EMC Deutschland GmbH
Am Kronberger Hang 2a
D-65824 Schwalbach/Taunus
Ute Ebers
Pressekontakt EMC
Till Stueve
Fink & Fuchs Public Relations AG
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