Storage Clips: EMC says DMX-3 enthusiasm sunk earnings

EMC's preliminary financial reports say an inventory problem is to blame for an earnings shortfall of $100 million in the second quarter.

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EMC misses earnings targets
EMC Corp. said it missed its revenue guidance of $2.66 billion for the second quarter of 2006 by around $100 million, and said the discrepancy was due to higher than expected orders for the new DMX-3 systems over the DMX-2, which resulted in an inventory snafu.

"We received more customer orders than we anticipated very late in June for our new EMC Symmetrix DMX-3 systems and fewer than anticipated customer orders for our prior-generation Symmetrix DMX-2 systems, and we therefore did not have the right inventory mix to fulfill demand as we closed the quarter," said EMC CEO Joe Tucci in a press release.

"We ended the quarter with healthy margins on our bookings and a backlog that was approximately $100 million larger than planned," Tucci said. "If we had been able to fulfill the strong Symmetrix DMX-3 demand and some of the other customer orders had come in a bit earlier, we certainly would have been able to meet our financial targets."

"It's something we weren't really expecting," said Brian Babineau, analyst with the Enterprise Strategy Group. "There were certainly rumors circulating on the street that EMC wouldn't make its second-quarter targets, but I don't think anyone expected them to miss targets with a storage system backlog that could get them there -- they are used to having back-loaded quarters and usually prepare for that very well."

Meanwhile, John Webster, founder and analyst with the Data Mobility Group, said the dip in earnings was not much of a surprise to him -- nor did he think the long-term consequences looked that dire. "I don't think the market will really punish EMC as much over that as they did over the RSA acquisition," Webster said. "If anything, they would have anticipated this kind of issue -- EMC has been taking it on the chin in the stock market lately."

EMC has rescheduled its earnings call, originally slated for July 24, to this Friday, July 14, at 8:30 a.m. Eastern time.

Exanet unveils clustered NAS CDP
NAS software maker Exanet Inc. announced continuous data protection (CDP) for its clustered (networked attached storage) NAS platforms. ExaStore CDP captures block-level changes to the clustered file system and allows a full reconstruction of the data from the "last known good" CDP image, combined with a previously replicated copy of primary data.

Smarsh offers Novell email archiving
Unlike Microsoft Exchange and other common email servers, Novell Inc. did not include a built-in function for capturing emails on GroupWise, making it far more difficult and expensive to put an in-house archiving system in place. Instead, Smarsh Inc. is offering its own proprietary archiving service to users of GroupWise version 6.5 (or later). The service will be compliant with Securities and Exchange Commission Rules 17a-4 and 204-2, and NASD Rules 3010 and 3110. Under the terms of the service, Smarsh will retain all messages on write once, read many optical media at the company's data centers and will mail clients their messages monthly on a password-protected CD or DVD. The service provider also preserves all messages on multiple secure, redundant and mirrored networks for compliance searching online.

Sun, Imation plan fourth generation T9840
Sun Microsystems Inc. and Imation Corp announced an agreement to jointly develop and launch an extension to the Sun StorageTek T9840 drive platform. The planned fourth generation T9840D will increase the native capacity of tape cartridges to 75 GB. The new tape drive is now expected to be available in 2007.

Adaptec, Seagate combine SAS for channel evaluation
Adaptec Inc. announced that Seagate Technology has combined Unified Serial Controllers from Adaptec with its own Cheetah 15K 146 GB serial attached SCSI (SAS) disk drives to create a SAS Evaluation Kit to Seagate system builders and resellers. Adaptec Unified Serial Controllers -- the Adaptec SAS RAID 4800SAS and 4805SAS -- support both SATA and SAS disk drives to provide system builders with varying performance, capacity and price levels.

DNF updates Windows NAS
Dynamic Network Factory Inc. (DNF) announced new versions of its FlexStor-NAS product line featuring the Windows Storage Server R2 platform. DNF also announced that the FlexStor-NAS systems will incorporate the latest generation of Intel Corp. Xeon "Woodcrest" processors starting next month.

Other major NAS upgrades announced this week include support for clusters and NAS gateway functionality, and storage scalability to more than 100 terabytes (TB) for DNF's modular FlexStor-NAS systems and up to 30 TB in a single chassis for its integrated FlexStor-NAS systems. In addition, SATA-based FlexStor-NAS configurations are now available with support for 750 GB hard drives and dual-parity RAID-6 for optimum fault tolerance. Pricing for the FlexStor-NAS product line starts at $4,000.

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