EMC disappoints Wall Street but insists Dell deal is on track

Unfulfilled orders hamper EMC in Q1

EMC has taken a swipe at rivals who are slating its merger with Dell as it misses analysts' expectations for Q1.

For the three months to 31 March, net profit at EMC crept up two per cent year on year to $297m (£206.5m), on sales which sell the same amount to $5.5bn. Analysts had expected revenue of $5.64bn, according to StreetInsider.

The vendor said global economic factors weighed on it in Q1.

EMC Information Infrastructure's CEO David Goulden said:

"As we've discussed before... as businesses accelerate their adoption of newer storage technologies to drive their IT transformation, they remain cautious about their transactional spending, including traditional standalone storage," he said.

"As a result, these counteracting spending behaviours pressure the overall growth of the market. Against this backdrop, our overall storage [revenue] was down six per cent in Q1. The continued customer caution in transactional spending resulted in a very late quarter and higher-than-anticipated build-up of unfulfilled orders compared with Q1 last year."

The firm said headway is being made on the merger with Dell. EMC CEO Joe Tucci said: "We continue to make progress on our combination with Dell. Integration planning has accelerated to ensure we begin at full speed upon closing, the leadership team has been established, and we've received the vast majority of anti-trust approvals required. We expect the transaction to happen on the original terms and within the originally announced timeframe."

Rivals have been keen to try to cash in on any uncertainty customers might feel around the merger. Earlier this month, HPE launched a campaign which directly referenced the Dell-EMC merger, claiming the move will slow them down, and that customers should consider working with it instead.

On the earnings call, one analyst asked the firm how it has responded to its rivals using the merger as a chance to try to pinch customers.

Goulden said EMC has not been bothered by rivals' claims.

"Obviously people will try to take advantage of an opportunity," he said. "Compared with Pure, we have a fundamentally different and more advantageous architecture. We have a system which is designed to scale out and have data services running always on, all the time. Pure basically has a dual-control architecture and that limits their ability to scale out and limits their ability to expand into broader workloads.

"For the traditional vendors like NetApp, I talked about how we are, in fact, picking off their customers. We were sweeping the floor with one of their top-five accounts during the quarter. We're very confident that although people are going to try to pick on us, we're the market leader and we're the biggest company in the industry. We are obviously going through some change. We're confident that our portfolio has never been stronger and our competitive position has never been stronger, which is great at this time."