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EMC: Fiscal 2Q13 Financial Results
4% revenue growth Q/Q and Y/Y for storage
(in US$
million)
|
2Q12
|
2Q13
|
6 mo. 12
|
6 mo. 13
|
| Revenues |
5,311 |
5,614 |
10,406 |
11,001 |
| Growth |
|
6% |
|
6%
|
Net income (loss)
|
650 |
701 |
1,236 |
1,281 |
EMC Corporation reported quarterly financial results
that were highlighted by record second-quarter consolidated revenue, net income
and EPS.
The
company achieved year-over-year revenue growth across all three of its federated
businesses, with continued steady growth from EMC Information Infrastructure,
double-digit growth from Pivotal and accelerating double-digit growth from
VMware.
Second-quarter consolidated revenue was $5.6 billion, an increase of 6% compared
with the year-ago quarter.
Second-quarter GAAP net income attributable to EMC was $701
million. Second-quarter GAAP earnings per weighted average diluted share
increased 10% year over year to $0.32. Non-GAAP net income attributable to EMC
was $907 million. Non-GAAP1 earnings per weighted average diluted share were
$0.42, an increase of 8% year over year.
EMC generated year-to-date operating
cash flow of $2.9 billion and free cash flow of $2.3 billion, and ended the
second quarter with $17.6 billion in cash and investments.
Second-Quarter Highlights
In the second
quarter, Information Infrastructure business increased revenue 4% compared with
the year-ago quarter.
Second-quarter revenue from Information Storage business accelerated to 4% year
over year.
Highlights within this include: 39%
year-over-year revenue growth from Emerging Storage business, continued
year-over-year revenue growth and market share gains from High-end Storage
business, and improved year-over-year revenue growth from Unified and Backup
Recovery business.
RSA Information
Security business increased revenue 3% year over year, and Information
Intelligence business continued to make progress during the quarter on its
transition to more cloud-friendly offerings and vertical-based solutions.
VCE had an
excellent second quarter as demand for Vblock systems showed strong
year-over-year growth. Additionally, VSPEX reference architecture solutions
continued to gain momentum with rapid adoption and increasing popularity with
customers and among partners who have sold over
3,600 VSPEX solutions
since their launch in April 2012.
In the second quarter, VMware achieved
solid double-digit year-over-year revenue growth. The company continues to excel
because it is uniquely positioned to help customers move from the client-server
era to the mobile-cloud era of computing. As VMware helps customers bridge to
this new world, it is empowering them to capture new levels of efficiency,
control and agility.
On April 1, 2013, EMC and VMware formed a new company -
Pivotal - which unites strategic technology, people and programs from EMC and
VMware, including: Greenplum, cloud Foundry, Spring, Cetas, Pivotal Labs,
GemFire and other products from the VMware vFabric Suite. Pivotal also announced
a strategic investment by General Electric company of approximately $105 million
in the company, representing a 10% equity stake. Pivotal made good progress in
its first quarter within the EMC federation, and is building a new platform
comprising next-generation data fabrics, application fabrics and a
cloud-independent platform as a service. In the second quarter, the company
announced the first version of this platform for next-generation big and fast
data applications, called Pivotal One, which will be launched before year end.
Consolidated second-quarter revenue from
the United States increased 4% year over year to $3.0 billion, representing 53%
of consolidated second-quarter revenue. Revenue from business operations outside
of the United States increased 8% year over year to $2.7 billion and represented
47% of consolidated second-quarter revenue. Within this, on a year-over-year
basis, revenue from Europe, Middle East and Africa region grew 6%, revenue from
AsiaPac and Japan region increased 12%, and revenue from EMC's Latin American
region grew 12%. Revenue from BRIC+13 markets increased 18% year over year.
Business Outlook
- Consolidated revenues are expected to be $23.5
billion for 2013.
- Consolidated GAAP operating
income is expected to be 18.5% of
revenues for 2013 and consolidated non-GAAP operating income is expected to
be 25.5% of revenues for 2013. Excluded from consolidated non-GAAP operating
income are stock-based compensation expense, intangible asset amortization,
restructuring and acquisition-related charges and the amortization of
VMware's capitalized software from prior periods, which account for 4.3%,
1.6%, 1.0% and 0.1% of revenues, respectively.
- Total consolidated GAAP
non-operating expense, which includes
investment income, interest expense and other income and expense, is
expected to be $331 million and consolidated non-GAAP non-operating expense
is expected to be $350 million in 2013. Excluded from consolidated non-GAAP
non-operating expense is a net gain on disposition of certain lines of
business and other for ($19 million).
- Consolidated GAAP net income
attributable to EMC is expected to be
$3.0 billion in 2013 and consolidated non-GAAP net income attributable to
EMC is expected to be $4.0 billion in 2013. Excluded from consolidated
non-GAAP net income attributable to EMC are stock-based compensation
expense, intangible asset amortization, restructuring and
acquisition-related charges, the amortization of VMware's capitalized
software from prior periods, the benefit of the 2012 R&D tax credit and a
net gain on disposition of certain lines of business and other, which
account for $675 million, $260 million, $170 million, $15 million, ($60
million) and ($11 million), respectively.
- Consolidated GAAP earnings
per weighted average diluted share are
expected to be $1.37 for 2013 and consolidated non-GAAP earnings per
weighted average diluted share are expected to be $1.85 for 2013. Excluded
from consolidated non-GAAP earnings per weighted average diluted share are
stock-based compensation expense, intangible asset amortization,
restructuring and acquisition-related charges, the amortization of VMware's
capitalized software from prior periods, the benefit of the 2012 R&D tax
credit and a net gain on disposition of certain lines of business and other,
which account for $0.31, $0.12, $0.08, $0.01, ($0.03) and ($0.01) per
weighted average diluted share, respectively.
- The consolidated GAAP income
tax rate is expected to be 20.5% for
2013. Excluding the tax impact of stock-based compensation expense,
intangible asset amortization, restructuring and acquisition-related
charges, the amortization of VMware's capitalized software from prior
periods, the benefit of the 2012 R&D tax credit and a net gain on
disposition of certain lines of business and other, which collectively
impact the tax rate by 3%, the consolidated non-GAAP income tax rate is
expected to be 23.5% for 2013.
- GAAP net income attributable
to the non-controlling interest in VMware
is expected to be $190 million and non-GAAP net income attributable to the
non-controlling interest in VMware is expected to be $285 million for 2013.
Excluded from non-GAAP net income attributable to the non-controlling
interest in VMware are stock-based compensation expense, intangible asset
amortization, restructuring and acquisition-related charges, the
amortization of VMware's capitalized software from prior periods, the
benefit of the 2012 R&D tax credit and a net gain on disposition of certain
lines of business and other, which account for $71 million, $15 million, $14
million, $4 million, ($6 million) and ($3 million), respectively. The
incremental dilution attributable to the shares of VMware held by EMC is
expected to be $10 million for 2013.
- Consolidated net cash
provided by operating activities is
expected to be $6.8 billion for 2013 and free cash flow is expected to be
$5.5 billion for 2013. Excluded from free cash flow are $900 million of
additions to property, plant and equipment and $400 million of capitalized
software development costs.
- The weighted average
outstanding diluted shares are expected
to be 2.17 billion for 2013.
- EMC expects to repurchase an
aggregate of $3.5 billion of the company's common stock
in 2013 and the first half of 2014.
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