EMC services fueled EMC's income in the second quarter of 2012. Virtualization, cloud computing and Big Data are the key trends that EMC cites for continued growth in its storage product revenue. While the company's products appear to be gaining modest share in the market, the real story of EMC's continued success is its Global Services operation.
The company's services business enjoyed a strong quarter, increasing earnings 18% over the same quarter last year. Services revenue was driven largely by customers looking to tap EMC's expertise in transitioning to cloud environments. Meanwhile, product revenue was up in the low single digits. While CEO Joe Tucci and newly appointed president David Goulden don't emphasize services financials on quarterly earnings calls, its clear that services is EMC's secret weapon.
The company reported net income of $649.5 million, a 19 percent increase from last year. Earnings per share stood at 29 cents in Q2, up 19 percent from the EPS the firm reported for the same period last year.
"We are seeing a transformation in the IT industry unlike anything we have seen before. Organizations are moving quickly to adopt cloud computing and take advantage of both the efficiency and agility that comes with running IT-as-a-Service," said Joe Tucci, EMC Chairman and CEO, in a statement following the earnings announcement. "Customers are also looking to deploy a new generation of Big Data applications to gain competitive advantage and differentiate their businesses. And they demand that all this be done in a secure and trusted way."
Cash flow is up 16 percent at $1.24 billion, and revenue rose by 10 percent to $5.31 billion. This is the interesting part.
The company's storage unit has seen a sales increase of 7 percent, and more notably its high-end storage systems generated 3 percent more cash than last year. This confirms that the 10 percent year-over-year decline EMC posted last year was in fact because customers were delaying their spending until a new product release.
BR Capital Markets analyst Daniel Ives said many investors will be focusing on the performance of EMC's high-end storage line, which he called the company's "bread and butter."
"The big question is, given the strong product cycle EMC has on that area of the business, if it could accelerate into the second half and drive a potential upside situation," Mr. Ives said. "That's a key variable outside the macro."
Mid-range storage climbed 10 percent, and the company's full-year guidance didn't budge. It expects $1.70 per share on revenue of $22 billion in fiscal 2012, while analysts have their money on EPS of $1.73 and $22.1 billion in sales. EMC's stock price increased early in the day following the announcement indicating the street was satisfied with the results.
Enterprises are spending more on storage now that they're facing a pressure to exploit their growing amounts of data in order to stay competitive. Being the single largest vendor in this industry EMC is benefiting from this trend, and even more so because it is starting to look at the bigger picture. Together with VMware the firm has been branching out into the cloud and other parts of the data center.
As for its services business, EMC President and COO David Goulden noted, "We have ... sharpened our services capabilities to help our customers successfully transition to cloud architectures." As part of that initiative, EMC's Global Services division earlier this year launched a number of new education and training services aimed aimed at helping current IT pros upgrade their skills around building flexible cloud environments. (Check out the below video with Tom Clancy, Vice President of Education Services at EMC, and Alok Shrivastava, Senior Director of Education Services at EMC, discussing Global Services' cloud architect training services.)
According to Wikibon analyst David Vellante, "Tucci walks a fine line with services because right now, with IBM, HP and Dell vertically integrating large services businesses, EMC and VMware are a great alternative for partners. However, the trend is clear, EMC's services business is a profit engine that will likely continue to grow."
Read the full article,
"Services Fuel EMC's Q2 2012 Earnings"
by MARIA DEUTSCHER, here:
http://servicesangle.com/blog/2012/07/26/emc-earnings-reflect-growing-demand-in-the-big-data-era/
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Jason Mundy & Tom Clancy - EMC World 2012 - #EMCWorld #theCUBE
EMC services fueled EMC's income in the second quarter of 2012. Virtualization, cloud computing and Big Data are the key trends that EMC cites for continued growth in its storage product revenue. While the company's products appear to be gaining modest share in the market, the real story of EMC's continued success is its Global Services operation.
The company's services business enjoyed a strong quarter, increasing earnings 18% over the same quarter last year. Services revenue was driven largely by customers looking to tap EMC's expertise in transitioning to cloud environments. Meanwhile, product revenue was up in the low single digits. While CEO Joe Tucci and newly appointed president David Goulden don't emphasize services financials on quarterly earnings calls, its clear that services is EMC's secret weapon.
The company reported net income of $649.5 million, a 19 percent increase from last year. Earnings per share stood at 29 cents in Q2, up 19 percent from the EPS the firm reported for the same period last year.
"We are seeing a transformation in the IT industry unlike anything we have seen before. Organizations are moving quickly to adopt cloud computing and take advantage of both the efficiency and agility that comes with running IT-as-a-Service," said Joe Tucci, EMC Chairman and CEO, in a statement following the earnings announcement. "Customers are also looking to deploy a new generation of Big Data applications to gain competitive advantage and differentiate their businesses. And they demand that all this be done in a secure and trusted way."
Cash flow is up 16 percent at $1.24 billion, and revenue rose by 10 percent to $5.31 billion. This is the interesting part.
The company's storage unit has seen a sales increase of 7 percent, and more notably its high-end storage systems generated 3 percent more cash than last year. This confirms that the 10 percent year-over-year decline EMC posted last year was in fact because customers were delaying their spending until a new product release.
BR Capital Markets analyst Daniel Ives said many investors will be focusing on the performance of EMC's high-end storage line, which he called the company's "bread and butter."
"The big question is, given the strong product cycle EMC has on that area of the business, if it could accelerate into the second half and drive a potential upside situation," Mr. Ives said. "That's a key variable outside the macro."
Mid-range storage climbed 10 percent, and the company's full-year guidance didn't budge. It expects $1.70 per share on revenue of $22 billion in fiscal 2012, while analysts have their money on EPS of $1.73 and $22.1 billion in sales. EMC's stock price increased early in the day following the announcement indicating the street was satisfied with the results.
Enterprises are spending more on storage now that they're facing a pressure to exploit their growing amounts of data in order to stay competitive. Being the single largest vendor in this industry EMC is benefiting from this trend, and even more so because it is starting to look at the bigger picture. Together with VMware the firm has been branching out into the cloud and other parts of the data center.
As for its services business, EMC President and COO David Goulden noted, "We have ... sharpened our services capabilities to help our customers successfully transition to cloud architectures." As part of that initiative, EMC's Global Services division earlier this year launched a number of new education and training services aimed aimed at helping current IT pros upgrade their skills around building flexible cloud environments. (Check out the below video with Tom Clancy, Vice President of Education Services at EMC, and Alok Shrivastava, Senior Director of Education Services at EMC, discussing Global Services' cloud architect training services.)
According to Wikibon analyst David Vellante, "Tucci walks a fine line with services because right now, with IBM, HP and Dell vertically integrating large services businesses, EMC and VMware are a great alternative for partners. However, the trend is clear, EMC's services business is a profit engine that will likely continue to grow."
Read the full article,
"Services Fuel EMC's Q2 2012 Earnings"
by MARIA DEUTSCHER, here:
http://servicesangle.com/blog/2012/07/26/emc-earnings-reflect-growing-demand-in-the-big-data-era/
