EMC Cautious

EMC, the $23.4 billion storage technology company, announced their Q4 earnings yesterday. Revenues for the quarter came in at $4.02 billion, growing 5% over the year, with non-GAAP EPS of $0.32. The current quarter ended EMC’s run of 21 consecutive quarters of double-digit revenue growth.

EMC closed revenues for the year at $14.9 billion, just under $100 million shy of its $15 billion target for the year. Over the year, the company recorded 12% revenue growth. EPS grew 7% to close at $0.77 for the year.

Information Infrastructure revenues for the quarter were up 2% over the year to $3.5 billion. Content Management and Archiving revenues were down 12% over the year for Q4 and grew 2% for the entire fiscal year. RSA security revenues for Q4 grew 5% over the year and were up 11% for the full year.

For the quarter, US revenues grew 4% over the year while EMEA revenues remained flat. Asia Pacific revenues grew 4% while Latin America was down 2%.

EMC repurchased 36 million shares for approximately $370 million during the quarter, taking the annual repurchase to 112 million shares worth $1.5 billion.

Continuing their initiatives to create a more lean cost structure, they announced the elimination of about 2,400 jobs. They are expecting to reduce their cost base by $350 million for the coming year and by $500 million by 2010 through job cuts and other efficiency improvement initiatives.

Due to the economic uncertainty, the company refrained from giving any guidance for the coming year or quarter.

They remained hopeful that customers will spend on risk and compliance even in a challenging economy. EMC’s wide portfolio of reliable, quality products and solutions, its geographic and customer diversity its and financial strength gives the company an advantage over competitors. EMC has a long-standing alliance with Microsoft, and during the quarter, it announced a licensing agreement with Microsoft under which the latter will build RSA’s Data Loss Prevention (DLP) classification technology into the Microsoft platform and future information protection products.

The company is optimistic about its ability to acquire companies and strengthen its portfolio over the coming year. During the quarter it spent about $50 million in building on the technology portfolio for VMWare. As part of this, EMC recently announced the acquisition of SourceLabs, an open source software support startup based in Seattle. I am hoping they are also looking at the acquisition of Ocarina as part of their strategy.

EMC has several product innovations planned in the coming year. For instance, in their VMWare portfolio, they are looking at a new version of the core virtual infrastructure platform, enhancements to the virtual desktop product and additional cloud offerings. For their security portfolio, they will introduce a new entitlements policy manager and an authentication manager to include more authentication methods for tighter security, a new release of Envision, and improvements to their data loss prevention product sweep. Within content management, they will introduce a new product for the compliance archiving space, expanded capability around collaboration and social networking for the enterprise, and a new case management framework.

The stock, however slipped 2.7% to $10.69 following the results announcement. It has recovered since and is trading at $11.60 with a market cap of $23.35 billion. This is quite a recovery given that the stock reached a 5-year low of $8.25 in November.