EMC Corporation (EMC)
Q4 2009 Earnings Call
January 26, 2010 8:30 am ET
Joseph M. Tucci - Chairman, Chief Executive Officer
David I. Goulden - Chief Financial Officer and Executive Vice President
Tony Takazawa - Vice President of Investor Relations
Jason Ader - William Blair
Mark Kelleher - Brigantine Advisors
William Shope - Credit Suisse
Benjamin Reitzes - Barclays Capital
Daniel Ives - FBR Capital Markets
Brian Marshall - Broadpoint AmTech
Ittai Kidron - Oppenheimer & Co.
Brian Freed - Morgan, Keegan & Co.
Maynard Um - UBS
Toni Sacconaghi - Sanford Bernstein
William Fearnley - FTN Equity Capital Markets
Kaushik Roy - Wedbush Morgan Securities Inc.
Mark Moskowitz - J.P. Morgan
David Bailey - Goldman Sachs
Welcome and thank you for standing by. (Operator Instructions). Now, I will turn the meeting over to Mr. Tony Takazawa.
Previous Statements by EMC
» E M C Corporation Q3 2009 Earnings Call Transcript
» EMC Corporation Q2 2009 Earnings Call Transcript
» EMC Corporation Q1 2009 Earnings Call Transcript
After the prepared remarks, we will then open up the lines to take your questions. I would like to point out that we will be referring to non-GAAP numbers in today’s presentation unless otherwise indicated. The reconciliation of our non-GAAP comments to our GAAP results can be found in the disclosure today in our press release, supplemental schedules, and the slides that accompany our presentation. All these are available for download within the investor relations section of EMC.com.
As always we have provided detailed financial tables in our news release and on our corporate website. These include a lot of financial details; so, we do encourage you to take a look at them. And with regard to details of VMware’s results, we refer you to their financial release from last night.
The call this morning will contain forward-looking statements and information concerning factors that could cause actual results to differ, can be found in EMC’s filings with the U.S. Securities and Exchange Commission.
Lastly, I will note that an archive of today’s presentation will be available following the call.
With that, it is now my pleasure to introduce David Goulden.
David I. Goulden
Good morning and thank you for joining us today. EMC showed good progress through 2009 and end of the year with very solid growth in Q4 with revenues of $4.1 billion up 17% from Q3 2009. Non-GAAP EPS of $0.33, up 43% and free cash flow of $793 million, up 6%. These quarterly results provide a good example of the resilience in our model with revenues up 2% over Q4 2008 demonstrating good profit leverage with non-GAAP EPS of 6% and solid free cash flow generation of 2%.
Within these results, our are EMC infrastructure business had a good quarter with $3.5 billion in revenue, up 15% sequentially and $0.28 of non-GAAP EPS, up 40% from Q3. On a year-over-year basis, non-GAAP EPS was up 12% on flat revenue, a result that clearly shows the success of our cost translation efforts.
As previously announced, VMware also had a strong fourth quarter contributing $607 million of revenue and was $0.05 of non-GAAP EPS of EMC and showed very good growth from Q3. Given the tough global economic conditions and an IT spending environment down across the board, EMC performed well as we moved through 2009. Our vision, strategy, and most importantly the hard work and sacrifice of EMC team as enabled our company to come out of the year with business momentum and very well positioned to grow and gain share in 2010 and beyond. It is especially worthy to note that even in this economic climate, the consolidated Q4 revenues, Q4 non-GAAP operating margin, Q4 non-GAAP EPS, and Q4 free cash flow results were all records for EMC. In other words, EMC is coming out of the worst global recession we have seen in our best financial shape ever. We think this is truly impressive.
Beyond the financial metrics, we’ve accomplished a lot in 2009. We maintained good focus on our goals and opportunities despite numerous economic and market distractions. We stay close to customers and help them through the tough time while other vendors cut back. We rolled out new market leading products with the best quality in our history. We successfully implemented our biggest cost translation program ever and strengthened the operational and financial position. We used our financial strength wisely to continue to invest in R&D and to make strategic acquisitions, both of which will contribute to our ongoing success, and we improved our customer satisfaction at an important time when customers are looking to solidify their true business partners.
While 2009 was a tough year, EMC achieved a lot of good things and exited the year in a very strong position.
So, moving to the agenda for today’s call, I will start off by making some comments about the Q4 spending environments, our business outlook for 2010, and then discuss some more specific details from our Q4 results.
Overall, the environment in 2009 was pretty much as we anticipated with reasonable stability at the end of the year. While there is still uncertainty as customers evaluate their own business prospects and plans, we do expect 2010 to be better than 2009. Joe will spend some time discussing the 2010 environments in his comments, but the next is that we currently see IT spending growing between 3% and 5% in 2010.