EMC Reports First Quarter Results.Business/Technology Editors HOPKINTON Hopkinton is the name of several towns in the United States:
EMC Corporation EMC Corporation (NYSE: EMC) is an American Fortune 500 and S&P 500 manufacturer of software and systems for information management and storage. It is headquartered in Hopkinton, Massachusetts, USA. (NYSE NYSE See: New York Stock Exchange :EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. ) today reported financial results for the first quarter of 2002. The results reflect continued progress in lowering EMC's cost structure and strong early customer adoption of EMC's AutoIS (Automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. Information Storage) strategy. Revenue for the quarter was $1.3 billion, 14% lower than the $1.5 billion reported in the fourth quarter of 2001. Net loss for the first quarter, excluding the after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. effects of a $28 million reversal to the third-quarter 2001 restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , was $97 million or $0.04 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with a fourth-quarter 2001 net loss of $70 million or $0.03 per diluted share. Consolidated net loss for the first quarter, including the after-tax benefit of the $28 million reversal, was $77 million or $0.03 per diluted share. In the year-ago first quarter, total revenue was $2.3 billion and net income was $399 million or $0.18 per diluted share. Joe Tucci Tucci is a surname, and may refer to:
tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. IT spending slump Slump A temporary fall in performance, often describing consistently falling security prices for several weeks or months. . The well for new application deployment remains fairly dry, suppressing demand for major new IT projects. Customers' purchasing activity during the first quarter was heavily focused on automating the management of their information and accelerating the consolidation of existing IT infrastructures. We saw a more than four-fold Adj. 1. four-fold - having four units or components; "quadruple rhythm has four beats per measure"; "quadruplex wire" quadruple, quadruplex, quadruplicate, fourfold increase in licenses for our new AutoIS software applications compared with the fourth quarter, representing the most rapid adoption of new software in EMC's history. Our leading storage platforms, advanced software functionality, automated management tools, and storage services expertise are helping EMC to capture the current opportunities and further drive our market leadership." Bill Teuber, EMC's Executive Vice President and Chief Financial Officer, said, "We have reduced the company's quarterly break-even level by more than $200 million over the last nine months -- exceeding our expense reduction goals a full quarter ahead of schedule. This progress contributed to an increase during the first quarter of more than $200 million in cash and investments, bringing our total cash and investments to approximately $5.3 billion. While our progress on the cost side of the equation has been excellent, we continue to invest in significantly more storage-focused R&D than any other company in the industry." With more than 1,000 licenses sold since their October October: see month. 2001 introduction, AutoIS open software applications such as ECC (1) (Error-Correcting Code) A type of memory that corrects errors on the fly. See ECC memory. (2) (Elliptic Curve Cryptography) A public key cryptography method that provides fast decryption and digital signature processing. StorageScope and ECC Replication In database management, the ability to keep distributed databases synchronized by routinely copying the entire database or subsets of the database to other servers in the network. There are various replication methods. Manager have advanced EMC's position as the market leader in open storage management. During the first quarter EMC also delivered the WideSky Developers Suite, enabling software vendors and other developers to access and manage various elements of a networked storage environment; and announced ESN (Electronic Serial Number) A unique identification number built into a cellphone for security purposes. Manager support for Compaq (Compaq Computer Corporation, Houston, TX, www.compaq.com) Compaq was the leading PC manufacturer when it was acquired by HP in 2002. Founded in 1982 by Rod Canion, Jim Harris and Bill Murto, one year later the company shipped 53,000 PC-compatible COMPAQ Portables, resulting in $111 StorageWorks, delivering on the AutoIS promise of open storage management across EMC and non-EMC storage platforms. Among the many customers who chose to implement EMC's AutoIS strategy during the first quarter were Quest Diagnostics Quest Diagnostics Incorporated (NYSE: DGX) is a United States corporation which provides clinical laboratory services . The company also has a business presence in England and Mexico. Quest Diagnostics is a member of the Fortune 500 and the S&P 500. , Eastman Chemical, Volvo Volvo Cars is the luxury car maker using the Volvo Trademark. The Volvo Group is a Swedish supplier of commercial transport solutions providing products such as trucks, buses and construction equipment, drive systems for marine and industrial applications, aerospace Car Corporation, ReadRite, and Norway's Det Norske Veritas Det Norske Veritas or DNV is a Norwegian company established in 1864. DNV is an independent foundation whose its objectives are "Safeguarding life, property, and the environment" and is a leading provider of services for managing risk. . EMC had other key customer wins during the quarter at Citigroup Citigroup U.S. holding company formed in 1998 from the merger of Citicorp (itself a holding company incorporated in 1967) and Travelers Group, Inc. The $70 billion merger included one of the largest U.S. investment banks, Salomon Smith Barney Inc. Inc., Deutsche Bank Deutsche Bank AG (IPA: /'dɔɪ.tʃə/[1]) (ISIN: DE0005140008, NYSE: DB) (English: German Bank , General Motors, United Airlines, and Intuit in·tu·it tr.v. in·tu·it·ed, in·tu·it·ing, in·tu·its Usage Problem To know intuitively. [Back-formation from intuition. Inc. in the U.S.; Germany's Adolf Adolf, or Adolph, was a popular given name, especially in the German-speaking countries, in Scandinavia and in the Netherlands - including among Jews living in these countries and sharing their languges and culture, and who previous to 1933 had no reason to avoid the name. Wurth GmbH GmbH Gesellschaft mit Beschränkter Haftung (German: limited liability company; business entity) & Co. KG, Sweden's Saab Automobile SAAB Automobile AB is automobile manufacturing company in Sweden, and is currently a wholly-owned subsidiary of the General Motors Corporation. SAAB is the exclusive automobile Royal Warrant Holder appointed by H.M. the King of Sweden. and Italy's Banca d'Italia Banca d'Italia is the central bank of Italy and part of the European System of Central Banks. It is located in Palazzo Koch, Roma, via Nazionale. The bank's current governor is Mario Draghi, who took the office on January 16, 2006. in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). ; and DBS
Bank  This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . in Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). , Korea's Kookmin Bank Kookmin Bank (hangul:국민은행) is the largest bank by both asset value and market capitalization in South Korea. The bank is led by Kang Chung-Won who previously worked for Seoulbank and oversaw its sale to competitor Hana Bank before moving to , and China's Ministry of Railway in the Asia Pacific region. Highlights of the first quarter included EMC's introduction of several new hardware, software and service offerings. In January January: see month. EMC launched "Rapid Results," a new business continuity offering combining the expertise and strength of EMC Global Services with EMC's industry-leading business continuity technologies. In February February: see month. EMC significantly increased the capacity, performance, connectivity and manageability man·age·a·ble adj. That can be managed or controlled: manageable problems. man of its industry-leading Celerra File Server, providing greater networked storage consolidation and NAS/SAN integration; and extended the delivery of its storage networking services through qualified partners with the introduction of EMC's Authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: Services Network. In March EMC introduced new CLARiiON This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . software to simplify networked storage management, reduce customer costs and increase data protection. Also during the first quarter, Gartner (Gartner, Inc., Stamford, CT, www.gartner.com) The largest information technology consulting firm that specializes in research and analysis. Founded in 1979 by Gideon Gartner, it has grown through acquisitions, including Dataquest in 1995 and Techrepublic in 2000. Dataquest (Dataquest Inc., San Jose, CA, www.dataquest.com) A major market research and analysis firm in the information field. Dataquest offers market intelligence on more than 25 topics and provides conferences, annual subscriptions and custom research. reported that EMC widened its lead as the #1 provider of storage management software in 2001, capturing 30.4% of the $4.9 billion market; and EMC was named "Channel Champion" by the readers of CRN CRN Computer Reseller News CRN Crown CRN Council for Responsible Nutrition CRN Crane CRN Community Recycling Network CRN Course Reference Number CRN Center for Responsible Nanotechnology CRN Cornish (SIL code, UK) (Computer Reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. News), a leading magazine for the reseller and solution provider market, being rated #1 in every category for "Enterprise Network Attached Storage." EMC Corporation is the world leader in information storage systems, software, networks and services, providing the information infrastructure for a connected world. Information about EMC's products and services can be found at http://www.EMC.com. EMC, CLARiiON, Celerra, AutoIS, ControlCenter, StorageScope, ESN, ESN Manager and WideSky are either registered trademarks or trademarks of EMC Corporation. Other trademarks are the property of their respective owners. This release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) further adverse changes in general economic conditions; (ii) further delays or reductions in information technology spending; (iii) the company's ability to effectively manage operating costs operating costs npl → gastos mpl operacionales and increase operating efficiencies; (iv) further declines in revenues; (v) insufficient, excess or obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. ; (vi) competitive factors, including but not limited to pricing pressures; (vii) component quality and availability; (viii) rapid technological and market change and the transition to new products; (ix) the uncertainty of customer acceptance of new products; (x) the relative and varying rates of product price and component cost declines; (xi) the effects of war or acts of terrorism, including the effect on the economy generally, on particular industry segments, on transportation and communication systems and on the company's ability to manage logistics in such an environment, including receipt of components and distribution of products; (xii) the ability to attract and retain highly qualified employees; (xiii) the uneven pattern of quarterly sales; (xiv) fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. currency exchange rates; (xv) risks associated with strategic investments and acquisitions; (xvi) the Company's ability to execute on its plans; and (xvii) other one-time events and other important factors disclosed previously and from time to time in EMC's filings with the U.S. Securities and Exchange Commission.
EMC CORPORATION
Consolidated Statements of Operations
Three Months Ended March 31, 2002
(in thousands, except per share amounts)
(unaudited)
Restructuring
As Reported Reversal Adjusted
Revenues:
Net sales $ 1,024,623 $ 1,024,623
Services 277,355 277,355
1,301,978 1,301,978
Costs and expenses:
Cost of sales 634,599 28,071(1) 662,670
Cost of services 166,334 166,334
Research and development 200,951 200,951
Selling, general and
administrative 454,668 454,668
Operating loss (154,574) (28,071) (182,645)
Investment income 55,525 55,525
Interest expense (2,861) (2,861)
Other expense, net (7,890) (7,890)
Loss before taxes (109,800) (28,071) (137,871)
Income tax benefit (32,941) (8,421)(1) (41,362)
Net loss $ (76,859) $ (19,650) $ (96,509)
Net loss per weighted
average share, basic $ (0.03) $ (0.01) $ (0.04)
Net loss per weighted
average share, diluted $ (0.03) $ (0.01) $ (0.04)
Weighted average shares,
basic 2,221,685 2,221,685 2,221,685
Weighted average shares,
diluted 2,221,685 2,221,685 2,221,685
As a % of total revenue:
Gross margin 38.5% 36.3%
Selling, general and
administrative 34.9% 34.9%
Research and development 15.4% 15.4%
Operating loss -11.9% -14.0%
Net loss -5.9% -7.4%
(1) Reversal of restructuring inventory provision taken in the third
quarter of 2001 and related tax impact.
EMC CORPORATION
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31, March 31,
2002 2001 (1)
Revenues:
Net sales $ 1,024,623 $ 2,056,926
Services 277,355 287,869
1,301,978 2,344,795
Cost and expenses:
Cost of sales 634,599 876,611
Cost of services 166,334 175,673
Research and development 200,951 224,040
Selling, general and
administrative 454,668 593,036
Operating income (loss) (154,574) 475,435
Investment income 55,525 71,609
Interest expense (2,861) (3,258)
Other income (expense), net (7,890) 2,506
Income (loss) before taxes (109,800) 546,292
Income tax provision (benefit) (32,941) 147,497
Net income (loss) $ (76,859) $ 398,795
Net income (loss) per weighted average
share, basic $ (0.03) $ 0.18
Net income (loss) per weighted average
share, diluted $ (0.03) $ 0.18
Weighted average shares, basic 2,221,685 2,203,865
Weighted average shares, diluted 2,221,685 2,248,773
As a % of total revenue:
Gross margin 38.5% 55.1%
Selling, general and
administrative 34.9% 25.3%
Research and development 15.4% 9.6%
Operating income (loss) -11.9% 20.3%
Net income (loss) -5.9% 17.0%
Effective tax rate 30.0% 27.0%
(1) Includes $11,121 in goodwill amortization classified in cost of
sales and $361 of goodwill amortization classified in research and
development that would have been excluded if Statement of Financial
Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
was in effect in 2001. Excluding the goodwill amortization would have
resulted in after-tax net income of $409,822 or $0.18 per diluted
share.
EMC CORPORATION
Consolidated Balance Sheets
(in thousands, except per share amounts)
(unaudited)
March 31, December 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $ 1,832,031 $ 2,129,019
Short-term investments 526,393 445,428
Trade and notes receivable, less
allowance for doubtful accounts
of $45,935 and $36,169 1,072,692 1,348,569
Inventories 513,704 583,985
Deferred income taxes 271,399 287,597
Other current assets 117,347 128,644
Total current assets 4,333,566 4,923,242
Long-term investments 2,933,608 2,509,112
Property, plant and equipment, net 1,820,560 1,827,331
Intangible and other assets, net 573,952 583,110
Deferred income taxes 43,266 46,840
Total assets $ 9,704,952 $ 9,889,635
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion
of long-term obligations $ 56,548 $ 56,677
Accounts payable 437,807 424,132
Accrued expenses 927,834 1,024,211
Income taxes payable 267,002 315,368
Deferred revenue 417,373 359,026
Total current liabilities 2,106,564 2,179,414
Other liabilities 88,585 109,401
Commitments and contigencies
Stockholders' equity:
Series preferred stock, par value
$.01; authorized 25,000
shares, none outstanding - -
Common stock, par value $.01;
authorized 6,000,000 shares;
issued 2,223,385 and 2,221,442 22,234 22,214
Additional paid-in capital 3,483,184 3,470,325
Deferred compensation (24,621) (29,209)
Retained earnings 4,111,896 4,188,755
Accumulated other comprehensive
loss, net (64,632) (33,007)
Treasury stock, at cost; 1,060
shares (18,258) (18,258)
Total stockholders' equity 7,509,803 7,600,820
Total liabilities and
stockholders' equity $ 9,704,952 $ 9,889,635
EMC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Three Months Ended
March 31, 2002 March 31, 2001
Cash flows from operating activities:
Net income (loss) $ (76,859) $ 398,795
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 158,814 144,931
Non-cash restructuring, inventory
and other special charges (28,071) -
Other than temporary declines in
equity investments 3,315 -
Amortization of deferred
compensation 4,267 5,256
Provision for doubtful accounts 20,275 8,989
Deferred income taxes, net 18,820 (7,743)
Net loss on disposal of property,
plant, and equipment 62 1,324
Tax benefit from stock options
exercised 359 90,315
Minority interest - 29
Changes in assets and liabilities:
Accounts and notes receivable 261,620 188,603
Inventories 98,359 (75,507)
Other assets 16,438 (85,361)
Accounts payable 12,475 (43,002)
Accrued expenses (96,587) (37,429)
Income taxes payable (48,366) (113,949)
Deferred revenue 53,321 32,920
Other liabilities (10,355) 3,130
Net cash provided by
operating activities 387,887 511,301
Cash flows from investing activities:
Additions to property, plant, and
equipment (115,128) (281,121)
Proceeds from sales of property,
plant and equipment - 17,128
Capitalized software development
costs (28,752) (29,737)
Purchases of short and long-term
available-for-sale securities (3,836,705) (1,133,922)
Sales of short and long-term
available-for-sale securities 3,197,647 927,925
Maturity of short and long-term
available-for-sale securities 98,966 74,175
Net cash used by investing
activities (683,972) (425,552)
Cash flows from financing activities:
Issuance of common stock 12,841 54,835
Proceeds from short-term
borrowings, net 718 -
Payment of long-term obligations (6,211) (8,484)
Cash portion of McDATA Corporation
spin-off dividend - (141,981)
Net cash provided (used) by
financing activities 7,348 (95,630)
Effect of exchange rate changes on cash (8,251) (3,735)
Net decrease in cash and cash
equivalents (288,737) (9,881)
Cash and cash equivalents at beginning
of period 2,129,019 1,983,221
Cash and cash equivalents at end of
period $ 1,832,031 $ 1,969,605
Non-cash activity:
Distribution of net assets in
McData Corporation dividend $ - $ 234,152
EMC Corporation
Supplemental Financial Data
Revenue Analysis
(in thousands)
(unaudited)
Q1 2000 Q2 2000 Q3 2000 Q4 2000 YTD 2000
Storage
Revenue
Information
Storage
Systems $1,267,164 $1,515,916 $1,646,869 $1,815,816 $ 6,245,765
Information
Storage
Software 269,988 350,257 332,344 482,544 1,435,133
Information
Storage
Services 116,405 134,437 161,395 199,852 612,089
Total
Information
Storage
Revenues 1,653,557 2,000,610 2,140,608 2,498,212 8,292,987
Other
Businesses 169,041 145,317 142,397 123,074 579,829
Total
Consolidated
Revenues $1,822,598 $2,145,927 $2,283,005 $2,621,286 $ 8,872,816
Q1 2001 Q2 2001 Q3 2001 Q4 2001 YTD 2001
Storage
Revenue
Information
Storage
Systems $1,564,312 $1,225,600 $ 675,591 $ 841,741 $ 4,307,244
Information
Storage
Software 467,519 497,538 242,521 352,444 1,560,022
Information
Storage
Services 231,986 231,995 236,734 271,559 972,274
Total
Information
Storage
Revenues 2,263,817 1,955,133 1,154,846 1,465,744 6,839,540
Other
Businesses 80,978 65,722 57,427 46,966 251,093
Total
Consolidated
Revenues $2,344,795 $2,020,855 $1,212,273 $1,512,710 $ 7,090,633
Q1 2002
Storage Revenue
Information Storage Systems $ 741,578
Information Storage Software 282,323
Information Storage Services 238,530
Total Information
Storage Revenues 1,262,431
Other Businesses 39,547
Total Consolidated Revenues $1,301,978
Note: Amounts may not foot due to rounding
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion