By: Jamie Davies
EMC, SAP and Intel have all reported quarterly figures, with cloud taking centre stage during all announcements.
EMC demonstrated positive growth within the cloud business units, though its staple business unit, EMC Information Infrastructure saw double-digit year-on-year declines. The $67 billion merger with Dell was prominent throughout the earnings call, as the team would appear to be in the final stages of confirming the transaction.
SAP’s HANA once again dominated the company’s earnings call, demonstrating healthy growth in revenues and customer numbers over the period. The company saw positive growth worldwide, despite challenging conditions in Latin America.
Finally, Intel is seemingly succeeded in its transition programme as it reported positive growth during Q1. The company is moving away from its historical playground, setting its sights on the increasingly affluent IoT and cloud market segment.
EMC core business unit drags while cloud soars
EMC Corporation has reported its Q1 2016 results at revenues $5.5 billion a year-on-year decrease of 2%, though its VMWare and Pivotal businesses experience positive growth over the same period.
While the EMC Information Infrastructure business saw Q1 revenues decrease of 6% to $3.8 billion, the company was bolstered by 5% revenue growth from VMWare, and a 56% increase from the Pivotal business. The company highlighted healthy growth within the Pivotal cloud and big data subscription software in particular, with annual recurring revenue up over 200% year-on-year, to $116 million.
“Work forces are becoming increasingly mobile,” said Joseph Tucci, President and CEO at EMC Corporation. “There is an explosion of data from connected smart device as sensors and telemetry are being built into every imaginable product. Companies are embarking on digital transformations to exploit this ever increasing amount of data, get more connected with their customers, employees, and suppliers. In short, we feel very good about the depth and breadth of our product portfolio.”
The results continue a trend of under-performance according to analysts, as this is now the sixth straight quarter EMC has missed analyst expectations. The company’s core business also saw declines as sales for its high-end storage services dropped 14%, though the flash storage business countered these declines somewhat, growing 122% year-on-year.
“The spending environment continues to be challenging as customers focus more on transformative IT projects while also minimizing transactional spend,” said Denis Cashman, CFO at EMC Corporation. “This customer behaviour is impacting our traditional business in the near-term. However, the major trends in IT remain intact, and we are having positive discussions with customers regarding how EMC and eventually, the combination of Dell and EMC, can help them with their IT and digital transformation.”
While the management would appear to be upbeat about the progress of EMC as an individual entity, attention could not be drawn away from the $67 billion Dell merger. The company claims the integration programme has been accelerated over recent months, and a number of EMC executives have included in the new leadership team announced by Michael Dell recently. Tucci also claims the team are now only awaiting regulatory approval from China, before the transaction can be completed.
S/4HANA dominates headlines at SAP quarterlies once again.
SAP has reported positive growth in the first quarter of 2016 as the company continues its transition from an enterprise to cloud-focused organization, with S/4HANA demonstrating healthy progress.
Cloud subscriptions and support revenues grew 33% year-on-year to €678 million, and new cloud bookings grew at 23% over the quarter to €145 million. The cloud business, as well as software support revenues, accounted for 69% of the quarter’s total revenues. EMEA demonstrated solid growth over the period, accounting for an 8% increase, whereas the Americas reported a 29% increase, despite political and economic instability in Brazil creating a challenging environment.
“Our cloud results this quarter leave no doubt that this business continues on its fast-growth path,” Luka Mucic, Chief Operating & Financial Officer at SAP. “Cloud revenue came in at 33% growth this quarter, which marks the 12th quarter in a row with 30%-plus growth rate excluding acquisitions. This is at the high end of our implied guidance range and ticking well ahead of our CAGR through 2020.
“New cloud bookings saw robust growth, up 23% or up 26% at constant currencies. With our strong cloud backlog and our strong bookings performance in 2015, we are well on track to deliver on our midterm growth ambitions in the cloud.”
SAP added more than 500 S/4HANA customers, of which approximately 30% were new. The company now boasts 3,200 customers for across the world for the product. HANA Enterprise Cloud was credited with particularly strong performance from the management team, as it highlighted customers are now utilizing the cloud platform for sensitive and mission critical processes.
“Companies are running their supply chain, manufacturing, asset management, sales and distribution that all operate on a 24/7 basis on the SAP HANA Enterprise Cloud,” William McDermott, CEO at SAP. “The triple-digit growth in this business is a validation of SAP Cloud innovation and we are only getting started.”
Intel cuts 12000 jobs to focus on IoT and cloud markets
Intel has reported year-on-year growth of 7% for Q1, taking the company’s revenues to $13.7 billion. Despite the positive growth, the management team also confirmed it would be cutting 12000 jobs, equivalent to 11% of the global workforce.
The Internet of Things group reported revenue of $651 million, an increase of 22% year-on-year, Security group revenue was up 12% to $537 million and the Data Centre group reported a 9% year-on-year growth to $4 billion. The company’s historical playground, its Client Computing group which includes PCs and mobile devices, was down 14% to $7.5 billion. The Client Computing group is where the management have revealed the majority of the job cuts will come from.
“Our results over the last year demonstrate a strategy that is working and a solid foundation for growth,” said Intel CEO Brian Krzanich, who is leading the company’s shift away from client computing and towards IoT and the cloud.
“The opportunity now is to accelerate this momentum and build on our strengths,” said Krzanich. “These actions drive long-term change to further establish Intel as the leader for the smart, connected world. I am confident that we’ll emerge as a more productive company with broader reach and sharper execution.”
During the call Krzanich detailed the company’s restructuring programme, in which the team aim to move away from the perception Intel is a PC company, focusing on the cloud and connected devices markets. The company claims the staff reductions will enable Intel to focus its resources on new priorities
“You take a look at it, 40% of our revenue, 60% of our margin comes from areas other than the PC right now,” said Krzanich. “It’s time to make this transition and push the company over all the way to that strategy and that strategic direction. So that’s why we wanted to do it now.”