EMC 8-K Emc Reports Third Quarter Results

Exhibit 99.1

	Contact:	Greg Eden
		508-293-7195
FOR IMMEDIATE RELEASE		eden_greg@emc.com

EMC REPORTS THIRD QUARTER RESULTS

Information Lifecycle Management Service Engagements Help Drive

EMC’s Ninth Consecutive Quarter of Double-Digit Revenue Growth

HOPKINTON, Mass. – October 19, 2005 – EMC Corporation (NYSE:EMC), the world leader in information management and storage, today reported financial results for the third quarter of 2005, achieving double-digit, year-over-year revenue growth for the ninth consecutive quarter. EMC’s third quarter growth was driven by its expanding services business, market-leading mid-tier storage systems, software for enterprise content management and backup, recovery and archive, and VMware’s virtual infrastructure software.

Total consolidated revenue for EMC’s third quarter was $2.37 billion, 17% higher than the $2.03 billion reported for the third quarter of 2004. Earnings per diluted share were $0.17, including $0.04 from a tax-related benefit, compared with $0.09 per diluted share reported for the year-ago quarter. Net income for the quarter was $422 million, including $106 million from a tax-related benefit, compared with $218 million reported for the third quarter of 2004. Excluding the tax-related benefit in the third quarter of 2005, earnings per diluted share were $0.13, up 44% from the year-ago quarter.

Joe Tucci, EMC’s President and CEO, said, “Few companies in our industry have been able to match the record of consistency and execution that EMC has achieved so far this year. Each of our major business segments and geographies continued to grow by double-digits during the third quarter, reflecting the power of our model, the soundness of our strategy and the excitement customers have about our expanding portfolio of solutions. We are in the midst of the most robust wave of new product introductions in our history, and customer response to our new products has been outstanding.”

“With each passing quarter,” continued Tucci, “information lifecycle management (ILM) is being adopted by more and more customers who see it as the most logical and efficient way to maximize the value of their information, answer the demands of compliance and get their IT costs under control. In the information infrastructure marketplace, our platforms and software are second to none, as is our ability to combine these products with consulting services to create complete ILM solutions.”

Systems revenue grew 15% in the third quarter compared with the year-ago quarter, to $1.09 billion. EMC grew its software license and maintenance revenues 16% to $865 million,

representing 37% of total EMC revenues. Professional services, systems maintenance, and other services revenue, which represented revenue from EMC’s fastest-growing business line for the second consecutive quarter, grew 25% to $402 million.

Bill Teuber, EMC’s Executive Vice President and Chief Financial Officer, said, “We again outperformed the market, while driving our level of profitability higher. Our twelfth straight quarter of meeting or exceeding our major financial targets was marked by continued operating leverage, solid cash flow and better than expected bottom-line results. We significantly stepped up our stock buy-back efforts by spending $333 million on more than 24 million shares in the third quarter and will continue to be very active in the market again in the current quarter.”

Third Quarter Highlights

EMC platforms and related software revenue had double-digit growth in the third quarter, driven by demand for EMC’s mid-tier networked storage systems including EMC CLARiiON, EMC Celerra and EMC Centera. During the quarter EMC introduced new versions of its EMC Symmetrix and CLARiiON networked storage systems, providing customers with an unparalleled range of tiered information storage functionality and performance. Interest in the new platforms was high, suggesting strong demand for the new Symmetrix and CLARiiON systems during the current fourth quarter, their first full quarter of general availability.

EMC multi-platform software revenue also had double-digit revenue growth during the quarter, led by backup, recovery and archive software license revenue, which increased 39% over the comparable prior-year period. EMC again saw strong demand for EMC Legato NetWorker, EMC EmailXtender and EMC Replication Manager as customers continued to place a priority on information protection and compliance. Content management software also delivered double-digit revenue growth in the third quarter as customers deployed the EMC Documentum enterprise content management platform to manage their growing volumes of unstructured information.

Services revenue growth of 25% was driven by professional services engagements as customers sought help to plan, build, manage and support their ILM implementations. Professional services engagements involving data classification, migration and consolidation, along with business continuity, increased as customers enlisted EMC Consulting to aid in the management and protection of their increasingly complex information infrastructures.

VMware achieved record quarterly revenues in the third quarter, exceeding $100 million for the first time in its history and continuing to be one of the fastest-growing major software businesses in the world. The EMC subsidiary showed continued growth as customers increasingly standardize on VMware virtual infrastructure for their x86 production environments to solve server consolidation and containment, business continuity, software lifecycle and enterprise desktop computing demands. During the third quarter VMware, in conjunction with 15 partners, introduced two major new initiatives aimed at fostering open virtualization standards and accelerating the availability of the widest possible range of options and support for virtualization. Also during the quarter Sun Microsystems joined Dell, Fujitsu, Fujitsu Siemens Computers, Hewlett-Packard, IBM, NEC and Unisys in offering VMware virtual infrastructure on its servers.

Business Outlook

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not give effect to (1) the provisions of the American Jobs Creation Act of 2004 or (2) the potential impact of any mergers, acquisitions, divestitures or business combinations that may be announced after the date hereof. These statements supersede all prior statements regarding Business Outlook set forth in prior EMC news releases.

Fourth quarter and full-year 2005

• Consolidated revenues for the fourth quarter of 2005 are expected to be between $2.67 billion and $2.69 billion.

• Diluted earnings per share for the fourth quarter of 2005 are expected to be between $0.16 and $0.17.

• Operating income as a percentage of revenue should reach the high teens in the fourth quarter of 2005.

• Consolidated revenues for 2005 are expected to grow at approximately 17%.

About EMC

EMC Corporation (NYSE: EMC) is the world leader in products, services and solutions for information management and storage that help organizations extract the maximum value from their information, at the lowest total cost, across every point in the information lifecycle. Information about EMC’s products and services can be found atwww.EMC.com.

EMC, Celerra, CLARiiON, Documentum, EmailXtender, Legato, Symmetrix and VMware are registered trademarks, and Centera and NetWorker are trademarks, of EMC Corporation and its subsidiaries. All other trademarks are the property of their respective owners.

This release contains “forward-looking statements” as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) risks associated with acquisitions and investments, including the challenges and costs of integration, restructuring and achieving anticipated synergies; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (vi) component and product quality and availability; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) insufficient, excess or obsolete inventory; (ix) war or acts of terrorism; (x) the ability to attract and retain highly qualified employees; (xi) fluctuating currency exchange rates; and (xii) other one-time events and other important factors disclosed previously and from time to time in EMC’s filings with the U.S. Securities and Exchange Commission. EMC disclaims any obligation to update any such forward-looking statements after the date of this release. Adjusted earnings per share, excluding the tax-related benefit in the third quarter of 2005, constitutes a non-GAAP financial measure. A reconciliation between this measure and earnings per share on a GAAP basis is provided in the table entitled “Reconciliation of GAAP to Adjusted Net Income” attached to this release.

EMC CORPORATION

Consolidated Income Statements

(in thousands, except per share amounts)

Unaudited

	Three Months Ended						Nine Months Ended
	September 30, 2005			September 30, 2004			September 30, 2005			September 30, 2004
Revenues:
Product sales	$	1,687,277		$	1,486,918		$	4,996,110		$	4,321,293
Services		678,465			541,961			1,957,578			1,550,399
		2,365,742			2,028,879			6,953,688			5,871,692
Cost and expenses:
Cost of product sales		813,760			746,131			2,425,379			2,190,976
Cost of services		274,365			239,547			819,829			701,921
Research and development		254,720			215,708			742,359			625,411
Selling, general and administrative		641,219			557,450			1,899,619			1,640,934
Restructuring and other special charges		5,849			—			6,817			32,688
Operating income		375,829			270,043			1,059,685			679,762
Investment income		47,986			38,373			134,475			115,410
Interest expense		(1,907	)		(1,880	)		(5,923	)		(5,575	)
Other income (expense), net		2,439			452			(934	)		(7,520	)
Income before taxes		424,347			306,988			1,187,303			782,077
Income tax provision		2,675			88,953			202,433			231,433
Net income	$	421,672		$	218,035		$	984,870		$	550,644
Net income per weighted average share, basic	$	0.18		$	0.09		$	0.41		$	0.23
Net income per weighted average share, diluted	$	0.17		$	0.09		$	0.40		$	0.23
Weighted average shares, basic		2,383,770			2,396,399			2,390,314			2,405,216
Weighted average shares, diluted		2,433,079			2,433,671			2,439,576			2,451,916
As a % of total revenue:
Gross margin		54.0	%		51.4	%		53.3	%		50.7	%
Selling, general and administrative		27.1	%		27.5	%		27.3	%		27.9	%
Research and development		10.8	%		10.6	%		10.7	%		10.7	%
Operating income		15.9	%		13.3	%		15.2	%		11.6	%
Net income		17.8	%		10.7	%		14.2	%		9.4	%

EMC CORPORATION

Reconciliation of GAAP to Adjusted Net Income

Three Months Ended September 30, 2005

(in thousands, except per share amounts)

Unaudited

	GAAP			Adjustments			Adjusted (1)
Revenues:
Product sales	$	1,687,277					$	1,687,277
Services		678,465						678,465
		2,365,742						2,365,742
Cost and expenses:
Cost of product sales		813,760						813,760
Cost of services		274,365						274,365
Research and development		254,720						254,720
Selling, general and administrative		641,219						641,219
Restructuring and other special charges		5,849						5,849
Operating income		375,829						375,829
Investment income		47,986						47,986
Interest expense		(1,907	)					(1,907	)
Other income, net		2,439						2,439
Income before taxes		424,347						424,347
Income tax provision		2,675		$	105,682	(2)		108,357
Net income	$	421,672		$	(105,682	)	$	315,990
Net income per weighted average share, basic	$	0.18					$	0.13
Net income per weighted average share, diluted	$	0.17					$	0.13
Weighted average shares, basic		2,383,770						2,383,770
Weighted average shares, diluted		2,433,079						2,433,079
As a % of total revenue:
Gross margin		54.0	%					54.0	%
Selling, general and administrative		27.1	%					27.1	%
Research and development		10.8	%					10.8	%
Operating income		15.9	%					15.9	%
Net income		17.8	%					13.4	%

(1) The adjusted column excludes certain tax benefits. The information presented is not prepared in accordance with generally accepted accounting principles ("GAAP"). Management uses these non-GAAP financial measures to gain an understanding of its comparative operating performance. Management believes that these measures provide useful information because they exclude activities that are not necessarily relevant to understand our business.

(2) Represents tax benefits resulting from the favorable resolution of certain income tax audits and expiration of statutes of limitations.

EMC CORPORATION

Consolidated Balance Sheets

(in thousands, except per share amounts)

Unaudited

	September 30, 2005			December 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	1,468,261		$	1,476,803
Short-term investments		2,996,492			1,236,726
Accounts and notes receivable, less allowance for doubtful accounts of $37,011 and $39,901		1,166,175			1,162,387
Inventories		756,245			514,065
Deferred income taxes		295,986			289,810
Other current assets		174,701			151,135
Total current assets		6,857,860			4,830,926
Long-term investments		3,155,644			4,727,237
Property, plant and equipment, net		1,679,572			1,571,810
Intangible assets, net		484,993			499,478
Other assets, net		560,327			509,041
Goodwill, net		3,607,111			3,284,414
Total assets	$	16,345,507		$	15,422,906
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term obligations	$	198		$	183
Accounts payable		517,523			522,587
Accrued expenses		1,113,316			1,090,666
Income taxes payable		438,394			404,772
Deferred revenue		1,020,966			930,492
Total current liabilities		3,090,397			2,948,700
Deferred revenue		683,162			570,995
Deferred income taxes		192,129			141,600
Long-term convertible debt		127,335			128,456
Other liabilities		104,429			109,868
Commitments and contingencies
Stockholders' equity:
Series preferred stock, par value $.01; authorized 25,000 shares, none outstanding		—			—
Common stock, par value $.01; authorized 6,000,000 shares; issued and outstanding 2,390,692 and 2,404,969 shares		23,907			24,050
Additional paid-in capital		5,976,723			6,221,099
Deferred compensation		(209,242	)		(124,286	)
Retained earnings		6,422,216			5,437,346
Accumulated other comprehensive loss, net		(65,549	)		(34,922	)
Total stockholders' equity		12,148,055			11,523,287
Total liabilities and stockholders' equity	$	16,345,507		$	15,422,906

EMC CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

Unaudited

	Nine Months Ended
	September 30, 2005			September 30, 2004
Cash flows from operating activities:
Cash received from customers	$	7,149,428		$	6,090,355
Cash paid to suppliers and employees		(5,646,136	)		(4,680,467	)
Dividends and interest received		184,133			113,692
Interest paid		(7,014	)		(4,730	)
Income taxes paid		(61,162	)		(65,641	)
Net cash provided by operating activities		1,619,249			1,453,209
Cash flows from investing activities:
Additions to property, plant and equipment		(418,962	)		(259,867	)
Capitalized software development costs		(121,208	)		(126,559	)
Purchases of short and long-term available for sale securities		(8,277,684	)		(6,431,165	)
Sales and maturities of short and long-term available for sale securities		8,037,653			5,909,212
Business acquisitions, net of cash acquired		(349,957	)		(544,016	)
Other		(8,155	)		(58,146	)
Net cash used in investing activities		(1,138,313	)		(1,510,541	)
Cash flows from financing activities:
Issuance of common stock		152,724			115,324
Purchase of treasury stock		(603,419	)		(417,554	)
Payment of long-term and short-term obligations		(3,011	)		(7,144	)
Issuance of long-term and short-term obligations		201			8
Net cash used in financing activities		(453,505	)		(309,366	)
Effect of exchange rate changes on cash		(35,973	)		317
Net decrease in cash and cash equivalents		(8,542	)		(366,381	)
Cash and cash equivalents at beginning of period		1,476,803			1,752,976
Cash and cash equivalents at end of period	$	1,468,261		$	1,386,595
Reconciliation of net income to net cash provided by operating activities:
Net income	$	984,870		$	550,644
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		474,889			450,923
Non-cash restructuring and other special charges		3,100			17,051
Amortization of deferred compensation		56,704			40,312
Provision for doubtful accounts		6,026			4,854
Deferred income taxes, net		55,430			154,017
Tax benefit from stock options exercised		36,263			27,330
Other		40,872			(1,746	)
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable		10,871			12,991
Inventories		(220,333	)		(15,372	)
Other assets		(46,414	)		(8,640	)
Accounts payable		(16,054	)		27,197
Accrued expenses		11,507			(5,567	)
Income taxes payable		50,194			(16,234	)
Deferred revenue		178,843			200,818
Other liabilities		(7,519	)		14,631
Net cash provided by operating activities	$	1,619,249		$	1,453,209
Non-cash activity:
–  Issuance of stock options exchanged in business combinations	$	41,381		$	72,026

EMC Corporation

Supplemental Financial Data

Revenue Analysis

(in thousands)

Unaudited

Revenue Components

	Q1 2004			Q2 2004			Q3 2004			Q4 2004			YTD 2004			Q1 2005			Q2 2005			Q3 2005			YTD 2005
Revenues
Systems	$	894,956		$	930,230		$	948,938		$	1,096,882		$	3,871,006		$	1,025,971		$	1,068,725		$	1,091,881		$	3,186,577
Software:
Software License		483,640			525,549			537,980			636,946			2,184,115			594,532			619,605			595,396			1,809,533
Software Maintenance		176,102			189,947			207,257			225,409			798,715			237,894			258,622			269,145			765,661
Total Software License & Maintenance		659,742			715,496			745,237			862,355			2,982,830			832,426			878,227			864,541			2,575,194
Professional, Systems Maintenance and Other Services		297,053			308,502			320,401			386,070			1,312,026			374,609			389,359			402,087			1,166,055
		1,851,751			1,954,228			2,014,576			2,345,307			8,165,862			2,233,006			2,336,311			2,358,509			6,927,826
Other Businesses		19,878			16,956			14,303			12,489			63,626			10,125			8,504			7,233			25,862
Total Consolidated Revenues	$	1,871,629		$	1,971,184		$	2,028,879		$	2,357,796		$	8,229,488		$	2,243,131		$	2,344,815		$	2,365,742		$	6,953,688
Percentage impact to EMC revenue growth rate due to changes in exchange rates from the prior year		5.9	%		3.9	%		3.1	%		2.5	%		3.7	%		1.7	%		1.7	%		0.6	%		1.3	%

EMC Corporation

Supplemental Financial Data

Revenue Analysis

(in thousands)

Unaudited

Supplemental Revenue Data

	Q1 2004		Q2 2004		Q3 2004		Q4 2004		YTD 2004		Q1 2005		Q2 2005		Q3 2005		YTD 2005
Symmetrix Hardware and Software Revenue (a)	$	671,838	$	650,181	$	646,292	$	755,342	$	2,723,653	$	652,328	$	677,655	$	633,308	$	1,963,291
CLARiiON Hardware and Software Revenue (a)		284,615		326,086		354,563		392,841		1,358,105		418,641		430,960		425,375		1,274,976
Connectivity Revenue (b)		143,516		164,326		169,105		191,917		668,864		176,053		188,189		226,829		591,071
Platform Software License Revenue	$	251,135	$	263,168	$	275,851	$	318,719	$	1,108,873	$	284,485	$	312,827	$	284,446	$	881,758
Platform Software Maintenance Revenue		66,525		73,210		83,617		93,260		316,612		100,064		104,601		109,727		314,392
Total Platform Software License and Maintenance Revenue	$	317,660	$	336,378	$	359,468	$	411,979	$	1,425,485	$	384,549	$	417,428	$	394,173	$	1,196,150
Multi-platform Software License Revenue:
Resource Management Software License Revenue	$	121,340	$	145,917	$	133,784	$	157,121	$	558,162	$	146,708	$	151,833	$	141,002	$	439,543
Backup and Archive Software License Revenue		37,962		38,977		36,404		53,011		166,354		51,742		49,877		50,467		152,086
Content Management Software License Revenue		40,051		38,656		42,195		51,515		172,417		49,302		39,160		47,637		136,099
Total Multi-platform Software License Revenue	$	199,353	$	223,550	$	212,383	$	261,647	$	896,933	$	247,752	$	240,870	$	239,106	$	727,728
Multi-platform Software Maintenance Revenue	$	103,931	$	109,455	$	116,110	$	122,396	$	451,892	$	125,371	$	134,476	$	137,196	$	397,043
VMware Software License Revenue	$	33,152	$	38,831	$	49,746	$	56,580	$	178,309	$	62,295	$	65,908	$	71,844	$	200,047
VMware Maintenance and Services Revenue		6,142		8,367		10,874		14,485		39,868		17,795		25,019		29,416		72,230
VMware Total Revenue	$	39,294	$	47,198	$	60,620	$	71,065	$	218,177	$	80,090	$	90,927	$	101,260	$	272,277

(a) Includes hardware, hardware upgrades and platform software.

(b) Includes Connectrix fibre channel switch/director revenues, Celerra file server revenue, exclusive of disk revenue and Rainstorage product revenues.

EMC CORPORATION

Supplemental Schedule of Earnings Adjusted to Expense Stock Options

(in thousands, except per share amounts)

Unaudited

	Three Months Ended						Nine Months Ended
	September 30, 2005			September 30, 2004			September 30, 2005			September 30, 2004
Net income	$	421,672		$	218,035		$	984,870		$	550,644
Incremental stock option expense, net of taxes		(76,901	)		(87,069	)		(246,515	)		(271,125	)
Adjusted net income	$	344,771		$	130,966		$	738,355		$	279,519
Net income per weighted average share, basic – as reported	$	0.18		$	0.09		$	0.41		$	0.23
Net income per weighted average share, diluted – as reported	$	0.17		$	0.09		$	0.40		$	0.23
Adjusted net income per weighted average share, basic	$	0.14		$	0.05		$	0.31		$	0.12
Adjusted net income per weighted average share, diluted	$	0.14		$	0.05		$	0.30		$	0.11

Note: The above presentation has been computed in accordance with Statement of Financial Accounting Standard No. 123, “Accounting for Stock-Based Compensation”.