EMC reported total revenue for the third quarter of $3.7 billion, roughly even with the low end of Wall Street estimates and an increase of 13% compared with last year's third quarter. It was also a modest sequential boost over revenue of $3.67 billion in the second quarter of this year. EMC's net profits were down 17% year over year to 411.3 billion, due mainly to comparison with last year's one-time revenue from the sale of shares in VMware.
EMC's revised outlook for the fourth quarter of $4 billion in revenues was slightly below analyst expectations of $4.14 billion, implying revenue of approximately $14.9 billion for the year as compared with the previously estimated $15 billion. "Not bad," according to a note to investors sent out today by Aaron Rakers of Wachovia.
EMC has also felt the pinch from the collapsing financial services markets. Two financial institutions in particular have affected Symmetrix enterprise system revenues for the quarter, Tucci said. Customers in other areas placed smaller orders than originally anticipated, looking to "keep their powder dry," as Tucci put it, for an expected global economic recession in 2009.
Documentum down, Symmetrix flat, Clariion up
Symmetrix revenues were roughly flat compared with the same quarter last year, according to Goulden. In a note to investors following the call Rakers estimated Symmetrix sales to have been down approximately 3% sequentially.
However, Rakers estimated that Clariion sales were up by exactly that amount from one quarter to the next, and EMC reported that Clariion revenues were up 12% year over year.
Storage analysts were mixed on the possible implications of these numbers. "Clariion went through a refresh this quarter so it gets more marketing and sales attention," said Enterprise Strategy Group analyst Brian Babineau. "It's [the nature of the] product and buying cycle … high-end storage systems typically are refreshed in the second and fourth quarters."
Illuminata analyst John Webster said the bigger, beefier Clariion CX4 likely took sales from Symmetrix among cost-conscious storage buyers. "I think you're seeing the effects of Clariion being more upscale and maybe siphoning off revenue that might have gone to Symmetrix," he said.
"Of course there is some overlap, but I don't believe there is enough cannibalization to equate to the downside," Babineau argued.
Meanwhile, EMC's content management and archiving business did not fare so well, down approximately 1% year over year. "Orders were impacted by customer caution, and we believe they will continue to be affected by weakness in enterprise software markets," he said.
Documentum revenue after a recent product refresh, "was disappointing, Babineau said. I can't imagine that the team is happy with that part of the business." He attributed the decline to increased competition. "SharePoint and other vendors are executing well," he said.
Other data archiving and compliance vendors have been bullish on their prospects in this economy, saying a wave of litigation and regulation is coming that customers will want to be prepared for. But Webster said there is a disconnect between storage pros and their organizations about responsibility and liability for documents and records management. "Storage admins understand data, not documents, and some would say they're not responsible for understanding documents," he said. "That's where the impasse lies."