EMC profit propelled by VMware's growth, IPO

by Jeremy Kirk

October 25, 2007 —

Storage maker EMC Corp.'s profit increased dramatically compared to last year's
third quarter, lifted again by continued growth of its VMware Inc. subsidiary
and EMC's recent sale of a slice of the company.

Net income for the third quarter ending Sept. 30 was US$492.9 million, or $0.23
per diluted share, which was 77 percent more over the same period a year ago,
EMC said Thursday. Those figures included the sale of 6 million shares of VMware
to Cisco Systems Inc.

Excluding the VMware gain, EMC's net income was $377.8 million, or $0.18 per
diluted share. Analysts predicted $0.17.

EMC, which acquired VMware in 2004 for $635 million, said in February it would
sell off 10 percent of VMware in an IPO (initial public offering), which was
completed in August. EMC said the money would go toward stock compensation for
its employees as well as boost the stock price. Intel Corp. now also owns a
stake in VMware.

VMware maintains a huge, 85 percent market share for virtualization software,
which allows multiple operating systems to run on one piece of hardware.

The technology remains a hot area, since virtualization enables servers to
perform at a higher level, reducing the need for more servers. EMC, which has
retained a majority stake in VMware, said third quarter revenue came in at $354
million, 90 percent higher than for the same quarter a year ago.

EMC said its Information Storage business reported 8 percent higher revenue,
backed by sales of its Clariion and Celerra networked storage systems plus other
backup and recovery products.

RSA, EMC's security business, saw revenue grow 22 percent over a year prior.
Those gains were attributed to RSA's authentication business, consumer applications
and event management business.

SMS: Storage equipment maker EMC's profits increased dramatically over its
third quarter last year, lifted again by VMware.

IDG News Service