Cashman steadies ship: EMC revenues shrink, profits fatten

Latin America revenues could be a concern, though

EMC saw a slight revenue decline year-on-year in the first 2016 quarter, with Latin America a trouble spot.

Revenues of $5.5bn were 2 per cent down year-on-year from $5.6bn. However profits, of $268m were 6.3 per cent higher year-on-year

EMC’s first quarter is seasonally weaker than its fourth quarter and, indeed, the fourth 2015 quarter saw much higher revenues of $7bn and profits of $771m.

EMC CEO and chairman Joe Tucci said: “We had a solid first quarter, generally in line with our expectations when adjusted for an excess of unfulfilled orders at the end of the quarter. The broad secular IT trends reshaping our industry continue playing out as we expected. Our investments in growth platforms are increasingly gaining momentum, and we are confident in the depth and breadth of our product portfolio.”

He also talked about the anticipated Dell acquisition, saying: “We continue to make progress on our combination with Dell. Integration planning has accelerated to ensure we begin at full speed upon closing, the leadership team has been established, and we've received the vast majority of anti-trust approvals required. We expect the transaction to happen on the original terms and within the originally announced timeframe.”

That means by October.

EMC’s CFO Denis Cashman – good name for a CFO – mentioned “a higher than expected build in unshipped storage product orders of approximately $75m due to the timing of bookings within the quarter.”

He also highlighted good news from EMC II: “We are pleased that EMC Information Infrastructure operating expenses were down eight per cent as our $850m cost reduction and business transformation plans announced last year are on track.”

Revenues in the core EMC II storage business were six per cent down year-on-year from $4.1bn a year ago, to $3.8bn. VMware first-quarter revenue within EMC was up five per cent year-on-year.

In its release EMC did not call out XtremIO revenues, suggesting that their growth rate might possibly have moderated.

Pivotal revenue was up 56 per cent year-on-year. Its subscription software’s annual recurring revenue was up over 200 per cent year-on-year.

There were regional imbalances:

• Revenue from North America was down three per cent year-on-year
• EMEA revenue was down one per cent
• Latin America revenues were down 14 per cent
• Asia-Pacific and Japan revenues were up two per cent.

With Latin America seeing troubles in Argentina, Brazil and Venezuela, it's not at all surprising that business there was affected adversely for EMC.

All-in-all a creditable quarter with no surprises. More details will come out in the earnings call later today. ®