Jul. 22, 2014, 10:47 PM
- VMware (NYSE:VMW) guided on its Q2 CC for its Q3 revenue of $1.48B-$1.52B, in-line with a $1.5B consensus. Full-year revenue guidance has been narrowed to $5.96B-$6.08B from a prior $5.94B-$6.1B; consensus is at $6.02B.
- License revenue rose 16% Y/Y in Q2, up from Q1's 15% and near the high end of guidance of $605M-$615M. VMware expects Q3 license revenue of $630M-$645M (+12%-14%), and full-year license revenue of $2.56B-$2.62B (+13%-15%).
- Services revenue (driven by past deals) rose 18% in Q2 to $843M. Op. margin fell to 29.4% from 33.5% a year ago.
- VMware's costly enterprise license agreements (ELAs) rose to 37% of bookings from 25% in Q1; eight $10M+ ELA deals were inked in Q2 vs. two in Q1.
- Cloud management license bookings grew over 30% Y/Y for another quarter, and end-user computing (PC virtualization/AirWatch) rose over 50%. ~50% of ELAs once more included the entire vCloud Suite.
- The company also says its much-hyped NSX networking virtualization/SDN platform is now on a $100M+/year run rate, and that its VSAN storage virtualization platform beat internal targets. Judging by total license growth rates, standalone server virtualization revenue is growing relatively slowly.
- Unearned (deferred) revenue +22% Y/Y to $4.39B. Long-term unearned revenue +23% to $1.68B.
- VMW +0.5% AH, as the guidance and a Q2 beat are taken in stride. Parent EMC, just challenged by Elliott Management to unload VMware, reports Wednesday morning.
- Q2 results, PR, earnings slides (.pdf)
Jul. 22, 2014, 5:30 PM
Jul. 21, 2014, 6:39 PM
- Though Elliott Management is pushing EMC (EMC +5%) to fully spin off VMware (VMW -2.5%), "management has made it clear its not in the best interest of EMC to do so" as recently as May, notes RBC. The firm considers it more likely EMC will buy out VMware's minority holders.
- Nonetheless, RBC thinks Elliott's efforts could propel EMC's shares higher, given the low valuation assigned to EMC ($58B market cap) excluding its VMware stake (market value of $32B). Oppenheimer, for its part, is hoping Elliott will get EMC to return more cash or cut costs.
- EMC has long argued holding onto VMware yields product synergies between VMware's server virtualization and data center/cloud management software, and EMC's storage hardware and management software.
- Among other things, the companies are currently working on Project Mystic, an integrated server/storage appliance that includes VMware's server (vSphere), storage (VSAN), and networking (NSX) virtualization offerings.
- Aside from product synergies, there's the fact VMware (expected to post 15%+ sales growth in both 2014 and 2015) continues to grow much faster than EMC's storage ops, which have been pressured by soft high-end demand and the adoption of cloud storage services running on white-label hardware.
Jul. 21, 2014, 7:39 AM
- EMC +4.9% premarket following a WSJ report that activist investor Elliott Management has taken a $1B-plus stake in the company and plans to push for a spinoff its VMware (NYSE:VMW) unit.
- Elliott's investment would amount to ~2% of EMC’s $55B equity value, and would make the hedge fund its fifth-largest shareholder and would be one of the largest positions Elliott has ever taken.
- Elliott will seek to convince EMC that the company’s lagging stock would receive a substantial boost if it were to spin off VMware, the report says.
Jul. 16, 2014, 12:35 AM
- VMware (NYSE:VMW) is forming a JV with SoftBank (OTCMKTS:SFTBF) to offer its vCloud Hybrid cloud infrastructure (IaaS) service in Japan. VMware will build and run the service, and SoftBank will provide the data centers and network it runs on. Both companies will offer the service through their sales channels.
- Over in China, VMware is partnering with China Telecom (NYSE:CHA) to offer vCloud Hybrid. In this case, China Telecom will operate the service, and VMware will simply provide the underlying software. The arrangement could appeal to Chinese firms hesitant to use a public cloud run by a U.S. company (say, Amazon) following the NSA uproar.
- Until now, vCloud Hybrid (launched in 2013) was only available at U.S. and U.K. sites. The service has won praise for the way it lets users jointly manage and quickly migrate public and private cloud workloads, but it continues facing tough competition from Amazon, Microsoft (the hybrid cloud leader), Google, IBM, and Rackspace, among others.
- Separately, parent EMC's RSA unit has bought technology assets from Symplified, a provider of cloud identity management services that enable single sign-on and automatic user provisioning for a variety of cloud apps/services. Symplified is shutting down its operations.
- EMC/RSA says it will add Symplified's IP to its Identity solutions portfolio. The purchase follows RSA's 2013 acquisition of Aveksa, a provider of tools for managing access to corporate apps and data.
- VMware reports on July 22, and EMC the following morning.
Jul. 8, 2014, 10:59 AM
- EMC (EMC -1.3%) has acquired TwinStrata, developer of a software platform (called CloudArray) that creates a secure connection between on-premise storage and public cloud storage providers, and allows the resources to be jointly managed. Terms are undisclosed.
- Among other things, CloudArray supports automatic cloud replication, local caching for high-use data, and integration with 3rd-party backup software. Supported cloud providers include Amazon, Google, Rackspace, and IBM/SoftLayer.
- A July 2013 Network World review called CloudArray "something of a milestone" for on-premise/cloud storage connectivity, albeit while adding the product still "needs polish."
- EMC says it'll integrate CloudArray with its high-end VMAX systems, and thereby provide an "embedded [cloud] data service" for VMAX. The move comes as rival NetApp overhauls its Data ONTAP OS to support joint on-premise/cloud storage management.
- EMC has been busy fleshing out its software lineup amid soft hardware sales. Last year, the company rolled out its ViPR storage management software platform, which can handle both EMC and non-EMC systems, and acquired ScaleIO, a developer of software that can pool and manage storage scattered across commodity servers.
Jun. 6, 2014, 6:40 PM
- Thanks to a 25% drop in high-end storage spend, external disk storage and total disk storage sales respectively fell 5.2% and 6.9% Y/Y in Q1, says IDC. Those figures contrast with Q4 growth rates of 2.4% and 1.3%.
- Market leader EMC, which depends heavily on its high-end Symmetrix line, saw its external share fall 110 bps Y/Y to 29.1%, and its total share fall 50 bps to 22.4%. EMC previously reported its high-end sales fell 22% in Q1; strong flash/scale-out storage sales partly offset the drop.
- NetApp's (NTAP) low high-end exposure allowed its shares to grow 30 bps and 50 bps to 15.1% and 11.7%, in spite of a 2.8% revenue drop. H-P's (HPQ) external share rose 40 bps to 8.8% (3PAR strength), but its total share fell 20 bps to 15.1% (server weakness).
- Things still look bleak for IBM, which reported a 23% Y/Y Q1 system storage revenue drop: Its external share fell 200 bps to 8.8%, and its total share 180 bps to 10.1%.
- The total disk share of non-top-5 vendors rose 370 bps to 28.8%. Chalk that up to both surging demand for cloud storage (getting cheaper by the quarter) running on commodity hardware, and solid momentum for flash/hybrid storage upstarts such as Nimble (NMBL), Pure Storage, and Nutanix.
- Hard drive/assembly suppliers: STX, WDC, HTCH
May 5, 2014, 5:55 PM
- In addition to announcing the DSSD acquisition, EMC has used the first day of its EMC World conference to unveil a slew of products aimed at the cloud infrastructure providers and flash/hybrid storage startups causing headaches for the company and other established array vendors.
- Among them is the Elastic Cloud Storage Appliance, a relatively low-cost solution that (via clustering) can support hyperscale data center architectures (beloved by the likes of Google, Amazon, and Facebook). EMC claims ECS can deliver a 9%-28% lower TCO for object storage deployments than Amazon/Google's public cloud solutions.
- EMC has also rolled out the second-gen version of its ViPR storage hardware/data management platform, which drew praise last year on account of its support for non-EMC platforms. ViPR now supports multiple sites and new data management services for commodity storage; the latter is made possible by recently-acquired ScaleIO.
- EMC, which already offers flash storage arrays (XtremIO) and PCIe server flash modules (XtremSF), argues DSSD's flash storage architecture is superior for I/O-intensive in-memory database and big data workloads (a fast-growing market segment). The secretive startup is backed by Sun Microsystems co-founder Andy Bechtolsheim.
- Last year's EMC World announcements
May 5, 2014, 1:19 PM| May 5, 2014, 1:19 PM | Comment!
Apr. 23, 2014, 9:32 AM
- Following a Q1 revenue beat, EMC has slightly upped its full-year revenue guidance to $24.575B from a prior $24.5B. But EPS guidance has been lowered by $0.05 to $1.90. The consensus is at $24.51B and $1.94.
- After rising 11% Y/Y in Q4, product revenue fell 3% in Q1 to $3.01B. Services revenue (driven by product revenue) rose 9% to $2.47B, after growing 10% in Q4.
- EMC's core Information Storage ops (67% of revenue) saw sales fall 3% Y/Y (product sales -7%) after growing 10% in Q4, thanks largely to a 22% drop in high-end storage sales (a high-margin business) to $940M. Unified storage and backup/recovery sales +4% to $1.44B, other storage -12% to $830M.
- Emerging Storage (inc. Atmos, Isilon, and flash storage) remains a bright spot, with sales growing 81% to $81% to $470M. RSA Security +5% to $244M, Pivotal (still waiting for its IPO) +41% to $49M.
- North American sales were flat at $2.99B, and EMEA grew 8% to $1.59B. But Asia-Pac fell 2% to $720M, and Latin America 11% to $180M.
- Gross margin -30 bps Y/Y to 62.8%, higher SG&A spend contributed to a 270 bps drop in op. margin to 20.5%. $390M was spent on buybacks in Q1; EMC still expects to repurchase $2B worth of shares in 2014.
- EMC is off thanks to its EPS guidance cut and VMware's (VMW -6.8%) soft bookings. VMware blames delays in closing enterprise license agreements (ELAs) as it holds "deeper conversations" about expanded deals.
- Q1 results, PR, slides
Apr. 23, 2014, 7:00 AM
Apr. 23, 2014, 6:54 AM
Apr. 23, 2014, 12:05 AM| Apr. 23, 2014, 12:05 AM | Comment!
Apr. 22, 2014, 6:15 PM
- Though VMware (VMW)'s license revenue rose 15% Y/Y in Q1 to $561M (beating guidance of $545M-$555M), the company disclosed on its CC license and total bookings growth was less than 10%, with sub-10% bookings growth in all three major geographies. Total bookings had risen at a mid-teens clip in Q4.
- Nonetheless, VMware is maintaining its prior forecasts for 2014 revenue of $5.94B-$6.1B (+14%-17%) and license revenue of $2.55B-$2.63B (+12%-16%). AirWatch is expected to contribute $100M.
- Q2 revenue, which assumes a $22M contribution from AirWatch, is expected to grow 15%-18% Y/Y to $1.425B-$1.465B (consensus is at $1.44B). License revenue is expected to grow 14%-16% to $605M-$615M.
- Some bright spots: End-user computing license bookings (PC virtualization, will include AirWatch going forward) rose 35%, and cloud management license bookings over 30%. Also, ~50% of VMware's costly enterprise license agreements (ELAs, 25% of bookings) included its far-reaching vCloud Suite.
- VMware's unearned revenue balance totaled $4.17B at the end of Q1, up 20% Y/Y. $169M was spent on buybacks.
- Parent EMC, which reports tomorrow morning, is following VMware lower.
- Q1 results, PR, CC slides
Apr. 22, 2014, 5:30 PM| Apr. 22, 2014, 5:30 PM | Comment!
Apr. 16, 2014, 10:57 AM
- "The outlook for storage spending continues to look mediocre as users pause and consider their alternatives. Although there still may be a storage upgrade cycle coming, we don't see it in our recent survey work," writes UBS, explaining why it's downgrading NetApp (NTAP -3%) to Neutral. EMC (EMC -1.3%) investors also aren't crazy about the commentary.
- A recent Barclays CIO survey also indicated storage spend remains soft, albeit while painting a brighter picture for broader IT spending. IDC estimates external disk storage sales grew 2.4% Y/Y in Q4 after falling 5.6% in Q3, with EMC grabbing share from IBM and NetApp's share roughly holding steady.
- UBS is also worried about intensifying competition from storage startups and cloud infrastructure providers. Smaller vendors offering all-flash or hybrid flash/hard drive solutions - examples include newly-public Nimble Storage and private Tintri and Nutanix - have seen rapid growth. NetApp is hoping to counter them with its upcoming FlashRay systems.
- Cloud infrastructure giant Amazon Web Services has been growing rapidly as well, and rivals such as Microsoft and Google are doing their utmost to play catch-up. Amazon, Microsoft, and Google all recently announced huge price cuts for their cloud storage offerings.
- Amazon and Google's platforms run on white-label hardware, and Microsoft is reportedly thinking of going down the same path.
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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