EMC CEO Joe Tucci said there was some "slight caution" among corporate technology buyers, but there's plenty of spending in North America.
Tucci's comments echo what CDW recently said about enterprise spending. CDW said last week that its March sales were $696.2 million, up 19 percent from a year ago. CDW's first quarter sales were up 17 percent from $1.86 billion. These two companies may be early indicators, but it appears enterprise technology spending is on solid footing. Tucci noted that enterprise spending in North America was off slightly from a year ago, but solid overall.
Tucci's comments, which came on EMC's first quarter conference call, followed strong earnings, which were driven by software sales. VMware led the pack among EMC units.
Overall, EMC reported net income of $312.6 million, or 15 cents a share, on revenue of $2.98 billion. Sales were up 17 percent from the same quarter a year ago. Wall Street was expecting earnings of 13 cents a share on revenue of $2.94 billion, according to Thomson Financial. Tucci said in a statement that EMC is on track to hit its 2007 financial targets.
As expected, software has been carrying EMC, which reported a systems revenue increase of 6 percent compared to a year ago. Information storage sales were up 8 percent. Software revenue was up 29 percent.
The breakdown of VMware’s software businesses looks like this:
- VMware had first quarter revenue of $256 million, up 95 percent from a year ago. Those results put VMware on track for $1 billion in annual sales. EMC has plans to sell 10 percent of VMware in an IPO.
- EMC's content management and archiving business--powered primarily by Documentum--had sales of $172 million, up 3 percent from a year ago.
- RSA had revenue of $120 million, up 25 percent from a year ago.
More color on enterprise technology spending is likely to emerge as a barrage of earnings from the likes of IBM, Microsoft and Intel hits over the next two weeks.