Q1 2014 Earnings Call Transcript

Transcript Call Date 02/20/2014

Customer interest remains high and we're working with a number of customer on proof of concepts addressing a variety of different workloads.

In Storage, overall revenue was flat. In Converged Storage, we saw 42% revenue growth over the prior year and 3PAR continues to perform very well, particularly in the midrange segment.

In Networking, we grew revenue 4% over the prior year. We saw good performance in switching, which grew revenue 5% over the prior year comparing very favorably against Cisco's results in the same period.

In Technology Services, revenue declined 4% over the prior year, but only down 2% in constant currency. We continue to see good adoption of our new portfolio, including Proactive Care, where orders grew triple digits year-over-year and Flexible Capacity services where we are seeing strong customer demand.

In Software, I feel good about the progress we are making. We have simplified the product line while rejuvenating our core portfolio. We are investing in key growth areas and the team is making great strides on area of operational improvements. Revenue was down 4% over the prior year, but we grew in key areas of the portfolio including security, cloud and Big Data.

Weakness in our IT management business, particularly in the U.S. and Asia, was partially offset by strengthen in security offerings like ArcSight and Fortify, as well as in our Vertica business.

In Autonomy, the technology continues to resonate very well with customers as we launched I IDOL 10 and Data Protector 8.1, the industry's first adaptive and self-aware backup and recovery solution. In addition Autonomy announced a major win with China Mobile selecting like IDOL to power the search capability of its strategic wireless city platform. This platform allows users to access information on thousands of public services directly from their mobile phones. So overall, I am very pleased with the progress we've made, but we still have a lot of work to do to drive consistent execution and navigate a rapidly shifting marketplace.

Now let me turn to our future outlook. The approach we outlined at our Security Analyst Meeting last fall remains our compass to guide us in FY '14. We will continue to focus on innovation, cash flow, our restructuring plans and executing on the areas of improvement in the turnaround, while taking advantage of the realities of the new style of IT.

We are not expecting any significant change in the macro environment. There are definitely some encouraging signs with improved performance in Western Europe, but headwinds remain in many emerging markets. Against the backdrop, our Q2 outlook for non-GAAP diluted net earnings per share will be $0.85 to $0.89 and for the full year the outlook will be $3.60 to $3.75.

So now, let me turn it over to Cathie for a closer look at our performance in the quarter. Cathie?

Cathie Lesjak - EVP and CFO: Thanks, Meg. Overall Q1 was a good to start fiscal 14, as some of the fundamental improvements we've been driving are beginning to take hold. But as Meg noted, we still are not satisfied with the consistency of our performance or the profitability across some of our businesses. So we remain very focused on improving our go-to-market and cost structure.

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