Wed, Jul. 22, 10:22 AM
- With expectations low going in - a raft of downgrades have arrived in recent months, EMC is higher in spite of guiding for 2015 revenue of $25.3B and EPS of $1.87, below a consensus of $25.6B and $1.90. Full-year free cash flow guidance has been cut by $100M to $4B.
- Product revenue remained under pressure in Q2, falling 3% Y/Y to $3.22B. Services revenue (driven by past product sales) rose 8% to $2.77B. Gross margin fell 190 bps Y/Y to 61.9%, and op. margin fell 320 bps to 19.4%.
- EMC's core Information Storage ops saw revenue rise 1% Y/Y to $4.03B. High-end storage sales fell 13% to $892M and unified & backup/recovery sales (mid-range) fell 9% to $1.43B, but emerging storage (flash, scale-out NAS, object storage) rose 49% to $718M, "other" storage (includes VCE's converged systems) rose 18% to $496M.
- VMware (up 3.6%) saw revenue rise 10% Y/Y to $1.6B, with license revenue rising 4% to $638M; guidance was in-line. End-user computing (PC virtualization/enterprise mobility), NSX (networking virtualization/SDN), and VSAN (storage virtualization) were strong points for VMware, while traditional vSphere server virtualization licenses were soft. RSA Security revenue fell 2% to $238M, and ECD (content management software) revenue fell 3% to $155M.
- $718M was spent on buybacks. EMC still plans to buy back $3B worth of shares in 2015.
- Q2 results, PR, earnings slides (.pdf)
Wed, Jul. 22, 7:01 AM
Tue, Jul. 21, 9:35 PM
- After posting a Q2 beat, VMware (NYSE:VMW) guided on its CC for Q3 revenue of $1.645B-$1.665B (+9%-10% Y/Y) and EPS of $0.98-$1.00, in-line with a consensus of $1.66B and $1.00. Likewise, full-year guidance is for revenue of $6.575B-$6.685B (+9%-11% Y/Y) and EPS of $3.97-$4.03 vs. a consensus of $6.65B and $3.99.
- License revenue (drives future services revenue) rose 4% Y/Y in Q2 to $638M, at the high end of a 3%-4% guidance range. VMware forecasts 6%-7% Q3 license growth, and 5%-7% full-year growth (prior guidance was 4%-7%). Services revenue (fueled by past deals) rose 14% in Q2 to $959M.
- Notably, VMware's costly enterprise license agreements (ELAs) made up 39% of bookings, up from Q1's 30% and matching seasonally strong Q4's 39%. Seven $10M+ deals helped out.
- The NSX networking virtualization/SDN platform now has 700+ paid customers, up from 400+ at the beginning of the year. VSAN storage virtualization customers have doubled over the same time to 2K+.
- End-user computing (EUC) license bookings rose over 30% Y/Y; desktop and AirWatch (enterprise mobility) license bookings respectively rose over 15% and 60% Y/Y in constant currency. When contrasted with VMware's total license growth, the EUC, NSX, and VSAN numbers suggest traditional vSphere server virtualization license sales remain under pressure.
- The unearned revenue balance rose 10% Y/Y to $4.8B. $412M was spent on buybacks; VMware expects to buy back $1.25B in 2015. Forex had a 4% impact on revenue growth.
- VMW +0.7% AH to $83.75. Parent EMC reports Wednesday morning.
- Q2 results, PR, earnings slides (.pdf)
Tue, Jul. 21, 5:30 PM
Wed, Apr. 22, 10:37 AM
- Thanks to forex pressures, EMC now expects 2015 revenue of $25.7B and EPS of $1.91, below prior guidance of $26.1B/$1.98 and a consensus of $25.9B/$1.97. But as is the case for subsidiary VMware (guided light yesterday afternoon, rising today), a soft outlook was expected.
- CEO Joe Tucci: "[W]e fell a bit short on first-quarter storage revenue due to geo-political factors in Russia and China and not executing as crisply as we had expected ... That said, we are confident that we will meet our business outlook for the year."
- EMC's core Information Storage sales (65% of revenue, the subject of recent analyst concern) were roughly flat Y/Y at $3.66B. High-end sales -7% to $871M, unified and backup/recovery (inc. mid-range) -11% to $1.28B, emerging storage (flash, object storage, scale-out NAS) +14% to $542M, other storage (inc. VCE) +16% to $967M.
- Content management software (ECD) sales were soft, falling 10% to $138M. RSA +1% to $248M, Pivotal +10% to $54M. VMware revenue rose 11% to $1.5B, with license revenue rising 3% to $576M.
- North American revenue rose 5%, Asia-Pac 1%, and Latin America 8%, while EMEA fell 2%. Forex respectively had 5%, 6%, and 7% impacts on Asia-Pac, Latin America, and EMEA growth.
- A hefty $1.5B was spent on buybacks in Q1, or half the $3B EMC has said it plans to spend in 2015. That helped offset a 150 bps Y/Y drop in gross margin to 61.3%. With EMC cutting costs, operating expenses (non-GAAP) rose a moderate 4%, excluding the 5% impact of the VCE deal.
- Shares have rallied to $27. Bernstein's pre-earnings upgrade is looking good for now.
- Q1 results, PR, earnings slides (.pdf)
Wed, Apr. 22, 6:59 AM
Tue, Apr. 21, 5:30 PM
Thu, Jan. 29, 10:07 AM
- With forex and VMware's soft outlook taking a toll, EMC (EMC - unchanged) is guiding for 2015 revenue of $26.1B and EPS of $1.98, below a consensus of $26.21B and $2.13.
- The company plans to buyback $3B worth of shares this year; VMware plans to repurchase at least $2B of its own shares. EMC spent $1.6B on buybacks in Q4, and $3B over the whole of 2014.
- The storage giant says it plans to cut jobs, but hasn't yet given a figure. Activist Elliott Management, which EMC just reached a truce with, has been pushing EMC to make changes.
- EMC's core Information Storage ops saw revenue rise 3% Y/Y in Q4 to $4.84B, with product revenue (drives future services revenue) rising 2% to $3.3B. High-end storage sales remained weak, falling 13% to $1.19B (contributed to the revenue miss).
- However, emerging storage (flash, scale-out NAS, object storage) revenue rose 52% to $800M. Unified and backup/recovery storage (includes mid-range NAS/SAN) grew 4% to $1.88B, and all other storage fell 4% to $960M.
- RSA revenue +5% to $290M; Information Intelligence (content management software) -1% to $170M; Pivotal (still awaiting an IPO) +18% to $65M.
- Gross margin rose to 65.4% from 64.6% a year ago, and op. margin to 28.9% from 27.4%. EMC ended 2014 with $8.3B in cash/short-term investments, $6.3B in long-term investments, and $5.5B in debt.
- Q4 results, PR, earnings slides (.pdf)
Thu, Jan. 29, 7:06 AM
Wed, Jan. 28, 5:30 PM
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Wed, Jan. 28, 10:08 AM
- Though VMware (NYSE:VMW) beat Q4 estimates and added $1B to its buyback, the company guided on its CC (transcript, earnings slides) for Q1 revenue of $1.49B-$1.51B and full-year revenue of $6.64B-$6.76B, below consensus estimates of $1.55B and $6.85B.
- Also: License revenue growth is expected to fall to 2%-3% in Q1 from Q4's 13%, and amount to 6%-9% for the whole of 2015. If not for forex, guidance would respectively be for 5%-6% and 9%-12% growth.
- VMware plans to buy back at least $1B worth of shares in 2015, up from 2014's $700M. The capex budget (boosted by cloud investments) is $400M.
- Given the outlook, and the fact that VMware's Q4 license bookings for products other than its vSphere server virtualization platform (when sold by itself) grew nearly 40% in Q4, traditional vSphere sales appear to be under heavy pressure. Microsoft has been claiming share gains for its Hyper-v platform, and open-source solutions (Xen, KVM) have also been gaining ground.
- On the bright side, end-user computing bookings (PC virtualization and AirWatch's enterprise mobility management offerings) rose over 60%. AirWatch now has 15K+ customers (declared by VMware to be twice that of its nearest rival), and saw over $200M worth of 2014 bookings.
- The NSX SDN/networking virtualization platform is on a $200M+ bookings run rate, and saw its paid customer count rise over 60% Q/Q in Q4 to 400+. Paid customers for the VSAN storage virtualization platform have topped 1K.
- Needham has downgraded VMware to Hold. Parent EMC (EMC +0.5%) is up moderately ahead of tomorrow's Q4 report, aided by a 1% gain for the Nasdaq.
Oct. 22, 2014, 7:05 AM
Oct. 21, 2014, 6:13 PM
- VMware (NYSE:VMW) has guided in its Q3 earnings CC slides (.pdf) for Q4 revenue of $1.67B-$1.71B, mostly below a $1.71B consensus. License revenue is expected to grow 11%-14% Y/Y; it was up 13% in Q3, and 16% in Q2.
- Meanwhile, parent EMC, which is set to report tomorrow morning, says it plans to disclose a "new business development." That appears to be fueling hopes a full VMware spinoff will be announced.
- EMC has already been reported to be thinking of fully unloading its VMware stake, as sought by Elliott Management.
- Earlier: VMware beats Q3 estimates
Oct. 21, 2014, 5:30 PM
Aug. 25, 2014, 7:13 PM
- VMware (NYSE:VMW) has used its analyst day (held at VMworld) to guide for mid-teens 2015 revenue growth; consensus is at 15.5%. Op. margin is expected to grow 100 bps Y/Y.
- Software-related VMworld announcements include: 1) A collection of tools meant to support the OpenStack cloud infrastructure (IaaS) platform. 2) A partnership with Google, startup Docker, and the Pivotal spinoff through which VMware's software will support Docker's Linux app containers. 3) New mobile, storage, and on-demand services for the vCloud Air IaaS platform (formerly vCloud Hybrid). 4) Updates to VMware's NSX SDN platform and vCloud Suite that respectively add new security and provisioning features. 5) The vRealize Suite, a cloud management platform that bundles several existing products.
- The OpenStack and Docker announcements have raised eyebrows, given OpenStack competes with VMware's cloud management offerings and Docker's containers act as a lightweight alternative to traditional virtualization software. The vRealize Suite will square off against products from the likes of Microsoft and Red Hat.
- "VMware’s strategy would commoditize some of what EMC does," says Baird's Jason Noland, taking stock of VMware's hardware and software efforts. "Neither one will admit it, but they’re heading right at each other."
- EMC downplays the commoditization risk, calling it "speculation at best." The storage giant has already shown a willingness to embrace software platforms that can affect sales of its proprietary hardware, or at least lower vendor lock-in.
Jul. 23, 2014, 10:19 AM
- EMC (EMC +1%) is reiterating 2014 revenue guidance of $24.575B, and raising 2014 EPS guidance by a penny to $1.91; that roughly matches a consensus of $24.57B and $1.91.
- With Elliott Management circling, the company now plans to buy back $3B worth of shares in 2014, up from a prior $2B. $600M was spent on buybacks in Q2, and $390M in Q1.
- Not surprisingly, EMC rejects Elliott's call to divest VMware (VMW +1.8%), and uses its earnings slides (.pdf) to point to synergies yielded by a "federation" strategy that involves holding onto VMware and Pivotal.
- Information Storage revenue (67% of total) rose 7% Y/Y in Q2 with the help of new products, a turnaround from Q1's 3% drop. High-end storage was still weak, declining 14% to $1.03B ahead of a VMAX refresh. But unified storage and backup/recovery (VNX, Data Domain) +6% to $1.57B, and emerging storage (flash and object storage, scale-out NAS) +52% to $470M. Other storage -6% to $900M.
- RSA Security +6% to $240M, content management +4% to $160M, Pivotal +29% to $54M.
- Product revenue only rose 2% Y/Y, while services revenue (more stable) rose 9%. Gross margin fell 50 bps Y/Y to 63.8%, and op. margin 160 bps to 22.6%, thanks partly to healthy increases in R&D and .SG&A spend.
- VMware is moving higher, following an initially muted reaction to its Q2 beat and in-line guidance. CLSA has upgraded shares to Buy, citing the strength of new products and the potential for a spinoff.
- Q2 results, PR
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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