EMC's Enterprise Storage Sales Dipped in Q1

By Pedro Hernandez

As the Dell-EMC merger races toward the finish line, EMC announced that its storage sales slipped in the first quarter.

EMC today reported first-quarter (Q1) 2016 revenues of $5.5 billion, a 2 percent year-over-year decline. Wall Street analysts had expected EMC to bring in sales of $5.63 billion. Net income was $603 million, or 31 cents a share, 2 cents shy of analyst estimates.

Sales at EMC Information Infrastructure, which is responsible for the Hopkinton, Mass. company's enterprise storage array business, dropped 6 percent to $3.81 billion. Included in that amount are $228 million in sales of RSA's security offerings (down 8 percent) and $134 million in EMC Enterprise Content Division revenues (down 3 percent).

"While overall we executed well in the first quarter, we did experience a higher than expected build in unshipped storage product orders of approximately $75 million due to the timing of bookings within the quarter," said EMC's CFO, Denis Cashman in a statement. The business unit's operating expenses dropped by 8 percent, he added.

Meanwhile, EMC Information Infrastructure is gearing up to make "major new product announcements" related to all-flash primary storage at the EMC World conference, which kicks off on May 2, said CEO, Joe Tucci, during an earnings conference call this morning.

On the bright side, Pivotal, EMC's cloud-focused subsidiary, saw its revenues jump 56 percent to $83 million with annual recurring revenues surging by 200 percent. Tucci revealed that Pivotal had scored two major customer wins during Q1, Allstate Insurance and Volkswagen.

VMware experienced a sales bump of 5 percent to $1.58 billion due to increasing demand for the company's virtualization software. In particular, buyers snapped up the subsidiary's End-User Computing, NSX and VSAN products in Q1, said Tucci.

Commenting on the impending close of the Dell merger, Tucci noted that the companies are waiting on China for its approval of the historic $67 billion deal. The Dell-EMC deal has already been given anti-trust approvals by the U.S., the E.U., Australia, Canada and Japan.

"We expect this transaction will close under the original terms and in the originally announced timeframe," said Tucci. Dell and EMC said they expect the acquisition to close in mid-2016 when the deal was first announced in October. "I am more convinced than ever that our combination with Dell is a great strategic option for our shareholders, customers, partners and people," added the executive.

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

This article was originally published on April 20, 2016