EMC’s 4th quarter earnings were marked by higher revenues. 47% of this revenue was brought by EMC’s operations outside the U.S. further indicating that businesses with interests outside the U.S. are still able to make it through these recessionary times.
EMC believes a number of strategic initiatives have been responsible for a good earnings report. These strategic initiatives include:
- Sustained aggressive investment in research and development, totaling 12% of annual consolidated 2009 revenue.
- Increased strategic acquisitions including deduplication storage solutions company Data Domain.
-Stronger strategic alliances with its partners such as Cisco, Microsoft etc.
-Penetration down market into customer storage technologies through services such as Iomega and Mozy.
EMC has also announced that it expects to repurchase $1 billion of its common stock.
Quickly skimming through their published unaudited full year results, it appears that the contribution of product sales as a percentage of total sales has declined to 63% for full year 2009 as compared to 68% for 2008. On the other hand, revenues from services have grown from 32% in 2008. to 37% for full year 2009.
COST OF SALES
Cost of Product Sales as a percentage of total revenue has remained constant for 2009 as compared to 2008. Cost of Service as a percentage of total revenue has also remained constant.
Share of Net Income attributable to VMware has declined in 2009 as compared to 2008. It was 44725,000 in 2008 as compared to 33,724,000 in 2009.
CASH & CASH EQUIVALENTS
Although cash and cash equivalents have increased as a whole as compared to full year 2008, there has been a decline in “net cash provided by operating activities” by approximately 6.5%. Free cash flow for consolidated EMC may have marginally increased by 1.7% but free cash flow from EMC information infrastructure has declined by approximately 13%.
InvesGuard has also rated and scored EMC through its proprietory governance model. Its Board of Directors and Senior Management score is dragged down by a few Board Independence and Effectiveness issues. Some directors have directly or indirectly entered into transactions with EMC.I mmediate relatives of directors have also been employed by the company raising Board Independence issues. In adequate information around spending on diverse and minority suppliers and a few other environmental metrics drag down the score as well.
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Disclosure: "No positions"