EMC Backup and High-End Storage Sales Dip in Q1

By Pedro Hernandez

EMC on April 22 announced $5.6 billion in revenue for the first quarter (Q1) of 2015, a 2 percent year-over-year increase. Profits took a hit, with an earnings per share of $0.31, an 11 percent drop compared to the same quarter last year.

Storage revenues dipped in the first quarter "due to geopolitical factors in Russia and China and not executing as crisply as we had expected in the first quarter," said Joe Tucci, CEO of EMC, in a statement. EMC's Information Infrastructure business, which encompasses the Hopkinton, Mass.-based company's enterprise data storage divisions, recorded revenues of $4.05 billion for the quarter, a 1 percent decline, year-over-year.

During a conference call to analysts and investors, Tucci elaborated on the shortfall by acknowledging that the company fell short $75 million in storage sales. "About two-thirds of this miss was due to the fact that we didn't execute as crisply as we normally do," he noted. "The other third was due to negative geopolitical effects in Russia and China that slowed down bookings."

David Goulden, CEO of EMC Information Infrastructure, cited "economy and currency headwinds" in Russia and "increased scrutiny of U.S. technology purchases in the government and financial services sectors" in China as some of the causes for the drop in revenues in his division during the call. EMC Information Infrastructure also shed 1,500 jobs in the first quarter, affecting the "go-to-market side of our business," he added.

Finally, Goulden noted that some customers are holding off in anticipation of a "major product announcement in the high-end of our backup and recovery portfolio." The company's Unified and Backup/Recovery business generated $1.28 billion, an 11 percent slide, while they waited. "I expect some announcements around backup and data protection at EMC World," he teased. The EMC World conference takes place May 4 -7 this year in Las Vegas.

The company had largely overcome the challenges that crimped storage sales last summer, claimed Goulden in a statement. "With most of the factors that impacted first-quarter storage revenue versus our expectations now behind us, the future is rich with opportunity for EMC Information Infrastructure."

EMC Emerging Storage, home to the company's cloud, big data and flash storage product lines, performed strongly with sales of $542 million, a 14 percent year-over-year improvement. "Within emerging storage, Isilon continues to lead the scale-out file and HDFS market with its unique scale-out file systems technology and native Hadoop support," Goulden told conference call attendees.

In total, sales of high-end storage systems fell 7 percent, year-over-year, to $871 million last quarter. The data storage provider's high-end VMAX III systems accounted for over 50 percent of the new systems EMC sold during the quarter, according to Goulden.

Pedro Hernandez is a contributing editor at InfoStor. Follow him on Twitter @ecoINSITE.

This article was originally published on April 23, 2015