CEOs Discuss the Storage Market: EMC, QLogic, Seagate, Agere, Sun Microsystems


Interesting quotes from CEOs and CFOs on recent earnings conference calls, discussing their companies and markets:

EMC CEO Joe Tucci

While we grew revenues 14% year-over-year, excluding security and normalized EPS grew 35% in 2006 over 2005, our execution was choppy and not up to EMC standards. 2006 was the year of two distinctly different halves. In Q1, our performance was barely adequate, we follow that up with a clear miss in Q2. In the second half of 2006, EMC came to life, and without a doubt Q3 and Q4 were strong by any measure. And very importantly, we believe this positive momentum and energy that we built up in the second half of the year will propel us to a successful 2007, and that success will be brought by consistent performance. Bill did a good job of covering and commenting on Q4, in 2006, so let me jump right into 2007.

For EMC, 2007 will be a year where we focus and execute on our core information infrastructure strategy, products and solutions. And over year, we focus and execute on a deeper integration in our development centers of our products and technologies, coupled with a deeper integration of our marketing, sales, support and services organization that bring these information infrastructure products and solutions to our customers and prospective customers. 2007 will be a year, we continue to focus and execute on a great success and massive opportunity, around VMware. And 2007 will be a year, we focus and execute on consolidating our backlog and support capabilities across of all of EMC. Collectively this focus coupled with crisp execution will give us more purpose and fire power in front of our customers, and help our integrated share of the 2007 IT spend, enhancing their customer satisfaction with EMC as a whole, while giving us some more efficient cost structure, assuring that 2007 will be EMC's year. To assure we attain this level of integration, focus and execution, it is our intention to not acquire any large companies in 2007. Obviously, if a great opportunity comes along, that is highly accretive and been highly beneficial to EMC and its shareholders, we would reconsider, but as I speak today, I can unequivocally state, that we have no large acquisitions planned. It is our expectation over, we will continue to enhance our product offerings and gain time to market and execute on several tuck-in acquisitions, much like we did last year with Avamar, Kashya and Network Intelligence.

When I look out on to 2007, everything I read and listen to points to a solid global economy. Forecast for IT spending predict an increase of approximately 6% over 2006, pretty close towards the increase in IT spend was in 2006 over 2005. Even better news for EMC is that, we are clearly participating in several of the hottest IT market segments. Segments that rank as top IT spending priorities in CIO survey, after CIO survey. These top 2007 IT spending priorities include Virtualization, Storage, Security, Content Management and Archive and Energy/Data Center efficiencies, all of which are right in EMC's wheel house. Again, I repeat the statement I made earlier, EMC has never been better positioned. Capitalize on the opportunities and ensure both specialization and focus along with consistency, we have organized EMC into four business units: Storage, Content Management and Archive, Security and VMware.

See the full EMC conference call transcript.

QLogic CEO H.K. Desai

During the third quarter of fiscal 2007, we have again set a new record for revenue and achieved our 46th consecutive quarter of profitability. Revenue in the third quarter fiscal 2007 was $157.6 million, up 22% from the comparable quarter last year and 8.5% sequentially. Third quarter revenue was within our guidance range of $154 million to $160 million provided during our second quarter earnings conference call.

In addition, we achieved record earnings for the third quarter. Our diluted earning per share was $0.28, an increase of $0.09 from the comparable quarter last year and $0.04 sequentially. This exited the high end of our guidance range of $0.25 to $0.27 per share provided during our second quarter earnings conference call.

During the third quarter, the revenue from SAN infrastructure products, which is comprised primarily of host bus adapters, switches and silicon, continued to grow at above market rates. For the third quarter, revenue from SAN infrastructure products was $152.5 million, an increase of 27% from the comparable quarter last year.

Driven by the ongoing transition from direct attached storage to SANs, and accelerated by the chip to mezzanine card conversion for blade servers, our HBA revenue experienced significant growth. Our HBA revenue, which includes both Fibre Channel and iSCSI technology, grew 33% from the comparable quarter last year and 14% sequentially. In addition to strong industry growth, QLogic continues to expand its market share positions.

See the full QLogic conference call transcript.

Seagate CEO Bill Watkins

I am very pleased to announce that Seagate has achieved a significant new milestone, delivering the industry's first $3 billion quarter, a 30% increase from our year-ago quarter.

These strong results were driven by a number of positive factors: the continued, explosive growth in digital content and the resulting increase in demand for storage; Seagate's ability to deliver a broadening suite of products to a growing set of customers; a better-than-expected pricing environment for desktop products during the period; and the successful transition of Maxtor customers to the more cost-effective Seagate products.

With the Maxtor integration completed and exciting new products hitting the market, we believe that Seagate will continue to increase profitability even as we enter the traditionally slower second half of the fiscal year.

Overall, the industry has completed its fourth consecutive year of annual unit growth in excess of 15%, and Seagate far exceeded that performance. Seagate continues to hold the leadership position in three of the four major markets by remaining committed to constantly improving our technology, investing in our operational infrastructure, and delivering on our financial objectives.

I'd like to give you just a few market highlights. In the mobile computing market, we delivered strong year-over-year growth, with a number of important perpendicular qualifications and an increase in average capacity.

In the consumer electronics, we shipped a record number of units and began qualifications of our new 1.8-inch perpendicular drive. Gaming was particularly strong, and DVRs continue to remain the highest-volume sector of the CE market.

In the enterprise space, we maintained our leading market share position, and have stabilized our position in this market following the Maxtor product transition. Our 2.5-inch small form factor products are gaining significant traction in this market. Specifically, qualifications of the 2.5-inch, 15,000 RPM product, the fastest drive on the market, will help generate future volume.

In the desktop market, we delivered an improvement in product mix, as a number of our drives shipped over 200 gigabytes grew substantially year over year. Entering our third fiscal quarter, we are in a healthy channel inventory position with respect to both Maxtor and Seagate products.

See the full Seagate conference call transcript.

Agere CEO Rick Clemmer our Storage business, we continue to expand our footprint for SOC and preamps. Agere recently announced the industries first single platter 60 gigabyte 1.8 inch hard drive and Agere's SOCs and preamps are used in this program. In addition we are seeing strong acceptance at Seagate, Samsung and Western Digital for our preamps targeted at 160 and 250 gigabyte per platter desktop drives. We also secured key design wins at major customers in 120 and 160 gigabyte per platter mobile drives.

Our storage business made recent headlines when we announced the BluOnyx mobile content server. This is a new consumer product category that enables users to store, stream and share music, videos and documents among different devices including cell phones, PC, digital cameras and camcorders. We see it's potential to bring people especially young people together to share content including music, game and video in a social setting. We are currently in active discussions with a variety of consumer electronic device makers and service providers to get the product to market before the end of the year. Perhaps the most important aspect of the BluOnyx device is what it says about how Agere has changed. BluOnyx [wasn’t] years in the making and didn’t require millions of dollar in R&D investment. What it did require was some creative thinking and teamwork. BluOnyx went from concept to product in just five months, [incorporating] existing IP from all three businesses to address an adjacent market opportunity. Similar to our TrueONE development approach, we are identifying additional ways to create added value from existing IP.

See the full Agere conference call transcript.

Sun Microsystems CEO Jonathan Schwartz

Now, in storage, we began shipping Thumper, the Sun Fire X4500 hybrid at the very end of Q2 and we are off to a good start. As I have suggested on prior calls, we are in the process of building out the next generation storage product line from Sun's server platforms along with Solaris in our ZFS virtualization technology. This strategy maximizes our return on engineering resources, improves our storage margins, and delivers to customers a common set of innovations with familiar interfaces.

In Q2, we had a number of key wins with Thumper in Web 2.0 companies, high performance computing installations along with the financial services sector. We will continue to aggressively cross-sell our current customer base, partner aggressively in areas not well served by this approach, and continue to develop the world's most efficient and cost-effective storage line up from tape to virtual tape to NAS and disk.

See the full Sun Microsystems conference call transcript.