EMC helps businesses build Web-based computing systems with its data storage products and services. Its hardware and software platforms enable enterprises to store, manage, protect, and analyze massive volumes of data. EMC also offers data security products through its RSA Security business and virtualization software through majority-owned VMware. The company serves both large, FORTUNE 500 organizations and smaller businesses across many industries. Banks, government agencies, ISPs, and manufacturers are among its customers. EMC serves a global client base from facilities and partners worldwide; about 45% of sales are from outside the US. In September 2016, EMC became part of Dell Technologies in a $67 billion deal.
Change in Company Type
The combination of Dell and EMC creates a nearly full-service IT operation. The company would provide PCs, services, IT services, and storage, filling gaps for each company. The deal does carry risk. It is highly leveraged with debt, although the money to finance the deal is being borrowed when interests rates are at rock bottom. And while getting a major storage provider the reason for the deal for Dell, it exposes the company to the volatility of the storage market. The deal closed in September 2016, less than a year after it was announced.
No matter how it's sliced, EMC makes most of its money from systems for information storage, data centers and cloud computing. Those products and services generate 73% of the company's revenue. VMware Virtual Infrastructure, which includes EMC's stake in publicly traded VMware, accounts for the rest.
EMC make its machines at facilities in US and Ireland; it also used third-party manufacturers for some products. The company operates software development facilities in the US and overseas.
The US is the company's largest market, accounting for 55% of sales. The EMEA (Europe, Middle East, and Africa) and Asia-Pacific regions contributed about 28% and about 13%, respectively. EMC saw growth in the US, but sales fell across the board elsewhere.
Sales and Marketing
EMC markets its products directly, as well as through a network of distributors, systems integrators, resellers, and OEMs. Participants in the company's selling partner program generate more than half of sales. The company's advertising expenses have risen in the past three years, hitting $29 million in 2015, compared to $25 million and $23 million n 2014 and 2013.
EMC managed to maintain its string of increasing sales in 2015 with a 1% rise from 2014. The company added just some $300 milion to its top line, reaching $24.7 billion. Services revenue rose 8% while revenue associated with products fell 4%.
Profit fell about 27% to $2 billion in 2015 from $2.7 billion in 2014. Higher expenses cut deeply into EMC's profits.
Cash flow from operations dropped to $5.4 billion in 2015 from $6.5 billion in 2014.
The growing trends of cloud computing and big data are transforming information technology, requiring companies to find new partners and invest in new products. EMC sees this as a huge growth opportunity and is focused on creating a product and services portfolio to meet these emerging needs. Research and development expenses in 2014 were about 12% of revenue, on par with spending from the previous two years.
The company has generated new products and services aimed at helping customer make an easier transition to cloud computing. The Isilon scale-out NAS Data Lake allows enterprises to scale easily to edge locations as well as public clouds. With VxRACK, EMC looks to aid enterprises and service providers in simplifying deployment of mobile, cloud, and distributed Tier 2 applications.
Shortly after finalizing the EMC deal, Dell Technologies sold EMC's Enterprise Content Division (ECD) to Open Text for $1.62 billion. The sale of ECD, which includes the Documentum unit, eliminates an area that would have been a sideshow in the combined Dell-EMC enterprise. The transaction also provided cash, which could help defray some of the cost of the EMC deal.
Mergers and Acquisitions
In July 2015 EMC acquired Virtustream, which develops technology that helps customers move their applications to cloud-based IT environments. The deal was valued at about $1.2 billion.
EMC acquired another seven companies for a total of $120 million in 2015. The acquirees included other developers of software for porting applications to the cloud.