You gotta hand it to the folks in Hopkinton: In what might turn out to be the worst IT spending slump since 2001—2002, EMC managed to post record-setting financial results not only for 2008 but also for the fourth quarter.
This week, the company announced that its 2008 revenues hit $14.88 billion – up 12% over 2007. Q4 2008 revenues topped $4 billion – up 8% sequentially and the first time EMC topped $4 billion in a quarter (not to mention generating an operating cash flow of $1.1 billion and free cash flow of $775 million). And it was the company’s sixth consecutive year of double-digit revenue growth.
On the storage front, the company reported that its Information Infrastructure business (which includes storage, RSA security, and content management and archiving products) racked up $3.5 billion in the fourth quarter – an increase of 8% sequentially. (VMware contributed revenue of $514 million in the fourth quarter, and $188 billion for the year.)
Storage-specific revenue increased 4% in 2008, in spite of weak Symmetrix performance (down 9%). That compares to IBM’s 16% decline in storage revenues in 2008, according to Robert W. Baird & Co.
But beyond the stellar financial results (given the macro economic conditions), I’m even more impressed with the company’s cost cutting measures, which recently included layoffs of about 2,400 employees, or approximately 7% of the company’s workforce, and a restructuring that included consolidating back-office functions, reduced spending on contractors, and a reduction in “management layers.” EMC officials expect the restructuring to reduce the company’s cost base by $350 million this year.
During the announcement, EMC officials estimated that 2009 global spending will decline as a percentage in the mid to high single digits compared to 2008, and that a higher-than-usual percentage of IT spending will take place in the second half of the year.