Increasing customer demand for big data technologies and cloud computing brought record financial results at EMC in the second quarter, the company reported Wednesday.
EMC's consolidated revenue rose 20 percent to $4.85 billion. Earnings per share increased 20 percent year over year to $0.24. The results came one day after EMC's majority-owned subsidiary VMware reported year-over-year revenue growth of 37 percent.
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With this increase the VMware business saw the strongest growth in EMC's revenue gains. Business at the RSA Information Security division grew 13 percent year over year. EMC's Information storage business grew 19 percent compared with the year-ago quarter. Revenue for EMC's high-end Symmetrix storage product portfolio, which includes the EMC Symmetrix VMAX, increased 15 percent. EMC's portfolio of mid-tier storage products saw growth of 27 percent.
EMC Chairman and CEO Joseph Tucci attributed the results to customer demand for cloud computing and big data solutions. Firms have to deal with more data than ever before because of, for instance, social media, EMC Executive Vice President and Chief Financial Officer David Goulden said in a conference call Wednesday morning. So they need products like those from NAS (network-attached storage) vendor Isilon Systems, which EMC acquired in late 2010.
As to the strong growth at VMware he said virtualization was "the fundamental building block for cloud computing."
Revenue in the U.S. grew 17 percent in the quarter to $2.5 billion. The U.S. market represented 52 percent of EMC's business. EMC's business outside of the United States hit an all-time record $2.3 billion, the company reported. Revenue outside the U.S. grew strongest in Latin America with an increase of 43 percent. Business in Asia Pacific and Japan increased 34 percent, while EMC's revenue in Europe, Middle East and Africa grew 20 percent.
The company's reported non-GAAP earnings of $0.35 per share exceeded the $0.34 estimate of analysts polled by Thomson Financial. EMC also beat analysts' revenue estimate of $4.73 billion.
Given the strong growth, Goulden said the company was raising its financial outlook for the year to consolidated revenue of more than $19.8 billion. The quarter before EMC had said it expected 2011 revenue to be $19.6 billion. CEO Joe Tucci said the company expects IT spending to grow 5 percent to 7 percent in 2011 and that expenses for storage, security and big data would grow "substantially faster."
Regarding the earthquake and tsunami disaster in Japan in March, he said EMC's business there was nevertheless going well. "We had no major supply chain interruptions," Tucci said.
As to the attacks on its RSA security division in March, Goulden said in the analyst call that the company had spent $66 million for a remediation program. Most SecurID customers had their tokens replaced, according to Goulden. "SecurID remains the industry standard" he said.