EMC reports $77M first-quarter loss

Data storage company EMC reported a $US77 million first-quarter loss on revenue that totalled $1 billion less than the same quarter a year ago.

The company on Thursday reported $1.3 billion in revenue for the quarter ended March 31. That compares to $1.5 billion for the previous quarter and $2.3 billion for the year-earlier period. The company, however, is still predicting a return to profitability by the second half of this year.

CEO Joe Tucci said the first-quarter loss reflects a drought in new application deployments among customers, who are "suppressing demand for major new IT projects." He also said the company has made progress in "across-the-board" operational improvements through diligent cost cutting, which is ahead of schedule. The company has laid off more than 6000 people in the past year.

Tony Prigmore, an analyst at Enterprise Storage Group in Milton, Massachussets, said EMC's results were disappointing, but mainly because software growth as a percentage of business declined.

"Their software business in Q4 was 29 per cent of [the business]. It appears to be about 27 per cent in Q1," he said. "I think the takeaway from that is not necessarily a slam on EMC's results; I think it says that no-one's escaping from this economy."

Tucci said the company's latest software offering, its so-called AutoIS suite, saw a fourfold increase in new licenses compared with the last quarter, "representing the most rapid adoption of new software in EMC's history." AutoIS is open management software that provides storage administrators with a single console to view their network and storage resources. EMC said it has sold more than 1,000 AutoIS licenses since its October introduction, But Prigmore said the majority of those licenses include EMC's mainstay ControlCenter management application.

"The two more recent [software applications] clearly cannot be meaningful revenue-wise. The good news is they've continued to sell a lot of the ECC software, which was a core product before the AutoIS initiative," he said.

Bill Teuber, EMC's chief financial officer, also cited as a plus the company's being a quarter ahead of schedule in cost-cutting initiatives, which had reduced quarterly "break-even" budget levels by more than $200 million over the last nine months.

"This progress contributed to an increase during the first quarter of more than $200 million in cash and investments, bringing our total cash and investments to approximately $5.3 billion," Teuber said.