In the recent past, we have observed that a customer's appetite for data storage has been constantly increasing. The need for speed has been the prime constraint for the customer application with voluminous data existing in applications like data warehousing and data mining. Flash drives are being unanimously preferred by customers for their storage solutions and deploying the application in a cloud computing environment. Flash drives provided speed, which can be almost 3 times as compared to conventional storage disk devices. Declining price of the flash drive is again a constraint that has enabled flash drive or the Solid State Drives (SSD) to be a favorite choice for customers.
Various chip manufacturers are now focused on their flash drive storage portfolio to leverage their top and bottom lines. EMC (EMC) is one such company that is a market leader in storage solution providers with global foot prints. Not just the storage, but EMC also provides various solutions like security, big data and hybrid cloud solution. The company's emerging business is its storage business with high end solutions and performance. The size of data has been exponentially growing and this growth has enabled companies like EMC to flourish. IDC ( Market research company) and EMC had jointly estimated global data size to be around 2,837 Exabytes (EB) in 2012, and it is estimated to reach 40,000 EB by 2020. As the digital world continues to expand it is further anticipated that by 2020, average storage requirement would be around 5200 Gigabytes (GB) per person. 1 Exabytes (EB) = 1000 Petabytes (PB) = 1 million Terabytes (TB) =1 billion Gigabytes (GB)
Overview of financial quarter
The company recently posted its second quarter results for the fiscal 2014. The company recorded record revenue of $5.9 billion for the quarter, up by 5% year over year. Product sales were up by 1.9% year over year, while services gained 8.7% as compared to same quarter last year. Operating cash flow gained 2% year over year to records $1.3 billion and free cash up 10% year over year to record $930 million.
Revenue growth for the company was mainly due to strong demand of XtremIO all flash storage, Isilon & ViPR products. These are the storage product portfolio of the company and revenues were up by around 52% year over year.
What looks good for EMC is that the total revenue recorded for the company is uniformly distributed (U.S & International), 52% is from US while remaining 48% from international operation. This looks good as balanced performance, and bad performing region can always be counter balanced by another region to maintain revenue growth. Furthermore both in U.S and overseas, it is recording growth which exemplifies, EMC's footprints is expanding. Revenue from U.S operation was up 3% year over year, to record $3.1 billion, while outside U.S was up 7% year over year to records $2.8 billion.
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Payout policy
Share holders of any company is always influenced with the share repurchase policy and dividends. EMC, always safeguarded investors interest with repurchase policy and declaring regular dividends. The share buyback policy always helps the company in maintaining a healthy EPS, also signifying a good cash balance which helps in share buyback & dividends.
In the second quarter EMC repurchased shares worth $600 million and also paid $200 million in form of dividends to its shareholders. The company has also revised its share repurchase budget from $2 billion to $3 billion for 2014 with an accelerated buyback plans. The company also anticipates of returning around $7.0 billion (share repurchase and dividends) in the tenure of 2013 to 2014.
Outlook
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