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Moving in a Different Digital Direction

Posted on: Tuesday, 25 April 2006, 21:00 CDT

By Andrea L. Stape, The Providence Journal, R.I.

Apr. 25--BOSTON -- Joe Tucci, EMC Corp.'s president and chief executive officer, made one thing clear during his speech yesterday to launch the company's annual technology conference -- EMC is not just a storage company.

After focusing almost exclusively during its first decade on selling computer hardware for storing large amounts of digital data, EMC has spent the last three years broadening its reach.

Hopkinton, Mass.-based EMC is now in the third phase of its transition into an "information lifecycle management" company, said Tucci. EMC wants its customers to know that instead of just storing data for companies, it sells software to move, organize, archive, manage, secure and manipulate data so customers can cut expenses and make their businesses more efficient.

Tucci worked hard yesterday morning to sell that message to the several thousand customers, partners, analysts and journalists gathered at the Boston Convention Center for EMC World.

"Storage is still important," said Tucci. "But it's information that's at the core, not storage."

That's a message EMC has been touting for the past few years. The company spent $4.5 billion on software acquisitions between 2003 and 2006 to increase its software line. The purchases resulted in software making up 36 percent of the company's first-quarter sales. And, according to Tucci, the company isn't done with its buying spree.

"There are more companies we have on our hit list," he said.

In addition, EMC spent more than $1 billion on research and development of both hardware and software last year. The company expects to pour more than $1.2 billion into research and development during 2006.

The broadened focus strengthened the company's bottom line -- it reported $272.5 million in income during the first quarter of the year.

But Tucci also focused on proving that EMC has strong growth potential and can continue to gain market share in both hardware and software. While the convention center floor was packed with technology believers, investors haven't bought into the message. The company's stock hasn't closed over $15 a share during the past two years. Yesterday, the shares dropped 19 cents to close at $13.47 each.

This year, the company already purchased $275 million in EMC stock off the open market and $125 million in convertible debt, as it works to boost the stock price. Last week, the board of directors authorized the repurchase of an additional 250 million shares. The company expects to repurchase $3 billion worth of stock in 2006.

In September 2000, before the dot-com implosion, EMC's stock was trading at just over $100 a share. After a slowdown in the technology industry caused EMC to report losses in 2001 and 2002, EMC's stock dropped to around $5 a share. While the share price has risen since that low, company executives have said over the past few years that they still feel the stock is undervalued.

This is the sixth year for EMC World, which was previously called the EMC Technology Summit. The conference is run by EMC's engineers and geared toward the technology employees of the company's customers. Over this year's four-day event, 330 technology breakout sessions are scheduled to give technology employees in-depth tutorials on what EMC's software and hardware can do.

In addition, EMC's technology partners -- such as South Kingstown-based American Power Conversion Corp. -- will hold seminars to show customers how their products can work seamlessly with EMC's offerings. The company expects more than 5,000 attendees -- mostly customers -- during the conference.

In addition, the event is geared toward dazzling attendees. EMC planned tours of Fenway Park and a concert by the Canadian pop group Bare Naked Ladies tomorrow.

"We really appreciate your business," said Tucci.

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Copyright (c) 2006, The Providence Journal, R.I.

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EMC,

Source: Providence Journal

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