Jan. 29, 2014, 12:05 AM
Jan. 28, 2014, 5:30 PM
Jan. 28, 2014, 5:25 PM
- VMware (VMW) guides in its Q4 earnings slides for Q1 revenue of $1.33B-$1.37B and 2014 revenue of $5.94B-$6.1B (+14%-17% Y/Y), in-line with consensus estimates of $1.35B and $5.99B.
- However, license revenue (drives future service revenue) is only expected to grow 12%-14% Y/Y in Q1 (down from a Q4 rate of 15%), and 12%-16% for the whole of 2014. In addition, VMware is guiding for a 2014 op. margin ~31%, down from a 2013 level of 34%. Investments in newly-acquired AirWatch (not expected to be accretive until late 2015) are a likely factor.
- Q4's top-line figures (both for total and license revenue) matched those provided last week at the time of the AirWatch announcement.
- VMware notes end-user computing (PC virtualization/mobile software) was an area of strength in Q4, with license bookings rising nearly 30%. That could be a positive for rival Citrix (CTXS), which reports tomorrow. Management/automation licenses (tied to VMware's vCloud suite) rose over 40%.
- The flip side of these numbers: VMware's server virtualization license bookings growth may have been below 10%. Microsoft's Hyper-V (bundled with Windows Server) has been taking virtualization share.
- VMware's unearned revenue balance rose 18% in 2013 to $4.1B. Full-year free cash flow was $2.19B, well above net income of $1.46B. $116M was spent on buybacks in Q4.
- Parent EMC, which reports tomorrow morning, is off in sympathy.
- Q4 results, PR
Jan. 22, 2014, 9:45 AM
- VMware (VMW -1.2%), parent EMC (EMC -1.3%), Citrix (CTXS -2%), and SAP (SAP -1.5%) are all lower following news of VMware's $1.54B acquisition of leading mobile device management (MDM) software firm AirWatch.
- Citrix (thanks to the Zenprise acquisition) and SAP (through its Sybase unit) compete with AirWatch. As does BlackBerry (BBRY +4.6%), which remains higher following news of its real estate sale plans.
- AirWatch's products, which also include mobile app management and security solutions, complement VMware's Horizon Workspace, which provides a secure, siloed workspace for business apps and files on mobile devices. With Citrix and SAP already offering an array of complementary mobile software tools for enterprises, VMware's move is in part an attempt to keep pace.
- AirWatch, Citrix, SAP, and BlackBerry, along with other firms such as IBM (previous) and Good Technology, are trying to profit from growing enterprise interest in MDM solutions, which help companies cope with the ongoing bring-your-own-device (BYOD) trend.
- In tandem with the acquisition, VMware has reported preliminary Q4 revenue of $1.48B (+15% Y/Y), slightly above a $1.47B consensus. Q4 license revenue is expected to come in at $$687M (+15%), within a guidance range for 12%-16% growth. VMware's full Q4 results are due on Jan. 28.
Jan. 22, 2014, 7:19 AM
- VMware (VMW) has agreed to acquire privately held AirWatch, a provider of corporate mobile-management and security products, for $1.175B in cash and $365M of installment payments and assumed unvested equity.
- AirWatch has over 10,000 customers globally and more than 1,600 employees.
- VMWare will fund the deal through cash on hand and $1B of additional debt from EMC (EMC). (PR)
Jan. 17, 2014, 11:37 AM
- Intel's (INTC -3.6%) partial blaming of weaker-than-expected Q4 server CPU division sales (revenue +8% Y/Y, but volumes only +1% Y/Y and -3% Q/Q) on a government shutdown comes across as a "bad excuse," thinks FBR.
- Though reiterating an Outperform, FBR is skeptical about Intel's long-term 15% revenue CAGR target for its server CPU division. Bernstein questioned the division's growth outlook yesterday afternoon.
- Goldman, reiterating a Sell (previous), says Intel's numbers "confirm our view that there is downside, not upside, to Intel's 2014 EPS." It's worried about both server CPU sales and a softening corporate PC upgrade cycle (driven by the Windows 7 transition) following Q1.
- JPMorgan, which upgraded Intel going into earnings, is defending the company. It's pleased with stabilizing PC demand and dismisses server concerns, given sales have historically been volatile.
- A major headwind faced by Intel's server CPU unit: Server industry revenues have been steadily declining, as demand shifts towards Web/cloud service providers with bigger economies of scale and a penchant for using cheap white-label hardware. IDC estimates total server sales fell 3.7% Y/Y in Q3, and that x86 server sales rose just 2.8%.
- Microsoft (MSFT -1.6%) and AMD (AMD -1.1%) are ticking lower following Intel's report. So are server virtualization kingpin VMware (VMW -1.9%), parent EMC (EMC -0.9%), and rival Citrix (CTXS -0.8%). Intel suggested on its CC virtualization growth is softening.
- More on Intel's Q4, CC transcript
Jan. 8, 2014, 5:39 PM
- EMC, no stranger to executive shakeups, has named CFO David Goulden the CEO of its mainstay Information Infrastructure (storage hardware/software and RSA) division. Goulden has already been responsible for the division's operations since July '12. (PR)
- The Information Infrastructure unit accounted for 75% of EMC's Q3 sales. With demand pressured by industry weakness and slumping U.S. federal orders, the division's revenue rose only 1.5% Y/Y during the quarter.
Dec. 30, 2013, 7:46 PM
- As part of its major Domain 2.0 infrastructure project, AT&T (T) has sent a request for information (RFI) to equipment suppliers asking them to submit ideas and architectures that support software-defined networking (SDN) - the shifting of network intelligence to software-based controllers that interact with switches/routers.
- MKM's Michael Genovese predicts AT&T's RFI will likely "have significant long-term consequences" for the telecom equipment industry. He sees the impact being "most negative" for Cisco (CSCO), and a positive for Ciena (CIEN), F5 (FFIV), Finisar (FNSR), and early data center SDN software leader VMware (VMW, EMC)
- AT&T, like others, is enthusiastic about SDN's potential to lower management costs, improve network efficiency, speed the provisioning of new services, and allow "white box" switches/routers to take the place of proprietary hardware.
- The last feature has many Cisco investors nervous, given its potential to increase competition and pressure margins. John Chambers has declared white box hardware (already embraced by many Web/cloud companies) to be a major long-term threat.
- Cisco is counting on its powerful Insieme hardware/software and ACI architecture (meant to adapt to the needs of apps/services) to help neutralize the SDN threat. But Genovese thinks ACI "seems too complex and proprietary compared to more white box-oriented architectures."
- Regarding VMware, Genovese believes the company's NSX platform (combines SDN with other features) has "a strong chance of being selected as the Data Center virtualization platform." Strong uptake is expected for NSX, which has won the support of many Cisco rivals, starting in 2015. Major carrier SDN adoption is expected to arrive later.
Dec. 23, 2013, 6:16 PM
- Reuters reports the NSA "arranged a secret $10 million contract" with EMC's RSA security hardware/software unit with the goal of creating an encryption backdoor that wound up being distributed via RSA's Bsafe cryptography libraries.
- RSA denies entering into a secret contract, and says its "explicit goal has always been to strengthen commercial and government security." But the company doesn't deny taking money from the NSA. GigaOm: "So who’s telling the truth here? Potentially everyone (barring the NSA, of course)."
- Several current/former RSA employees tell Reuters the company was misled by the government, which portrayed the random number-generation algorithm featuring the backdoor as a "secure technological advance." RSA urged its clients to stop using the algorithm in September, after the first reports of a backdoor emerged.
- RSA has been a bright spot for EMC as the company deals with slumping storage hardware demand. RSA's sales rose 11% Y/Y in Q3 to $250M.
Dec. 19, 2013, 2:15 PM
- A number of enterprise IT hardware names are moving higher on a slightly down day for the Nasdaq after Oracle provided better-than-expected numbers for its long-struggling hardware unit.
- After falling 14% Y/Y in the August quarter and badly missing estimates,, Oracle's hardware product sales only fell 3% in the November quarter, a decline that's favorable to a guidance midpoint of -6%. In addition, Oracle has set an FQ3 guidance range for the business of -2% to +8%.
- H-P (HPQ +2.4%), EMC (EMC +1.7%), NetApp (NTAP +1.3%), SGI (SGI +2.1%), Cray (CRAY +1.5%), Fusion-io (FIO +1.9%), and newly-public Nimble Storage (NMBL +1.8%) are among the companies rallying.
- Mellanox (MLNX +5.5%), which supplies InfiniBand hardware for Oracle's engineered systems (now 30% of hardware product revenue), is up sharply.
Dec. 13, 2013, 9:03 AM
Dec. 9, 2013, 10:55 AM
- QLogic (QLGC +0.2%) has hired Prasad Rampalli, until now EMC's cross-business-unit engineering chief, to be its new CEO, effective Feb. 3. (PR)
- Rampalli has been with EMC for three years. Before that, he spent 27 years at Intel in various positions.
- News of Rampalli's hiring comes seven months after the resignation of Simon Biddiscombe, QLogic's last full-time CEO. CFO Jean Hu has been serving as interim CEO since then.
Nov. 25, 2013, 4:03 PM
- The most popular shorts according to Goldman's Hedge Fund Monitor which analyzes the positions of 783 funds with $1.6T in assets (in reverse order, i.e. the last in this list is the most heavily shorted): SYY, KO, TGT, BMY, SNDK, UPS, SLB, GE, CVX, PFE, CAT, COP, EMC, PG, NFLX, WMT, JNJ, DIS, CRM, VZ, IBM, XOM, T, GILD, INTC.
- A quick scan finds Netflix making both the top 25 list of most heavily shorted and the top 20 list of most concentrated longs. List of 20 longs is here.
Oct. 22, 2013, 11:26 AM
- Seagate (STX -1.8%), Fusion-io (FIO -5.3%), and OCZ (OCZ -5.7%) have joined NetApp (previous) in selling off following EMC's (EMC -3.7%) Q3 miss.
- The storage giant's mainstay Information Storage unit saw a slight Y/Y drop in product sales, as 66% growth in flash and scale-out storage sales failed to offset an 8% Y/Y drop for high-end storage, a mere 3% increase in mid-range and backup/recovery hardware, and a 6% drop for other storage products.
- EMC's numbers follow a Q2 for which IDC estimated total disk storage systems sales fell 5% Y/Y, and external disk storage sales dropped 0.8%. EMC was assigned a 24.2% share of the former market (+170 bps Y/Y), and a 31.3% share of the latter (+90 bps).
- EMC blames its Q3 issues on U.S. federal demand; the company isn't alone in seeing federal weakness. However, both server and storage hardware sales have been pressured by the adoption of commodity/white-label hardware (generally using cheaper hard drives) by Internet giants and cloud infrastructure providers such as Google, Facebook, and Amazon.
Oct. 22, 2013, 9:36 AM
- Even as 80%-owned VMware flies higher thanks to its Q3 beat and guidance/CC remarks, EMC (EMC -4.8%) is lower after missing Q3 estimates thanks to a rough quarter for its core storage business. Full-year EPS guidance has been lowered to $1.80 from $1.85 (consensus is $1.86). NetApp (NTAP -2.2%) is off in sympathy.
- EMC's core Information Storage unit had 1% Y/Y sales growth vs. 4% in Q2. Product sales were down slightly, services +3%. While emerging storage sales (inc. Isilon, Atmos, flash storage) rose 66% Y/Y to $380M, high-end storage sales (Symmetrix) -8% to $1.05B, unified & backup/recovery (inc. mid-range hardware) +3% to $1.47B, other storage -6% to $880M.
- The RSA security unit was a bright spot, sales +11% to $250M. EMC and VMware's Pivotal spinoff, set to go public, had revenue of $80M (+21% Y/Y).
- Thanks in part to VMware, North American sales +3%, EMEA +8%, Asia-Pac +8%, Latin America +13%. EPS was boosted by $1B in buybacks. Gross margin was 63.9%, -20 bps Y/Y.
- A major question likely on investors' minds: how much of the storage weakness is due to a demand shift towards cloud infrastructure providers and Internet giants relying on some combo of commodity and flash hardware?
- Q3 results, PR, slides
Oct. 22, 2013, 7:13 AM
EMC vs. ETF Alternatives
EMC Corp supports the businesses and service providers to transform information technology (IT) operations to an as a service model (ITaaS). It operates in three segments: EMC Information Infrastructure, Pivotal and VMware Virtual Infrastructure.
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