Good morning, and welcome to the EMC First Quarter 2012 Earnings Conference Call. All parties are in a listen-only mode until the question-and-answer portion of the call. As a reminder, this conference is being recorded. If you have any objections, you may disconnect at this time. I would like to introduce your host, Mr. Tony Takazawa, Vice President, Global Investor Relations of EMC.

Thank you. Good morning. Welcome to EMC’s call to discuss our financial results for the first quarter of 2013. Today, we are joined by EMC Chairman and CEO, Joe Tucci, and David Goulden, EMC President and COO. To kick things off, David will comment on our results and how these tie with the execution of our strategy and business operations. He will also discuss our outlook for the year 2013. Joe will then spend some time discussing his view of what is happening in the economy and IT, EMC’s vision and strategy and how EMC is helping customers navigate the massive transformation happening in IT regarding cloud, big data, and trusted IT. After the prepared remarks, we will then open up the lines to take your questions. Today, we are providing you with our projected financial model for 2013. This model lays out all of the key assumptions and discrete financial expectations that are the foundation of our outlook this year. We hope that you find this model helpful in understanding our assumptions in context and in ensuring that these expectations are correctly incorporated into your models. This model is available as background in today’s slides available for download in the Investor Relations section of emc.com. Please note that we will be referring to non-GAAP numbers in today’s presentation unless otherwise indicated. The reconciliation of our non-GAAP comments to our GAAP results can be found in the disclosure in today’s press release, supplemental schedules, and the slides that accompany our presentation. As always, the call this morning will contain forward-looking statements and information concerning factors that could cause actual results to differ can be found in EMC’s filings with the U.S. Securities and Exchange Commission. With that, it’s now my pleasure to introduce David Goulden. David?

Thanks, Tony. Good morning everyone, and thank you for joining us today. This morning we reported a solid start for 2013 with revenue growth of 6% and non-GAAP EPS growth of 5%. While customer caution continued in the first quarter of this year, we executed well on our mission to capture the opportunities presented by cloud, big data, and trusted IT. Our growth outlook for the year of 8% and 9% for revenue and EPS is unchanged. And our Q1 results of 6% and 5% are consistent with the seasonal progression for revenue and EPS we discussed in January. We firmly believe our results of tax that our strategy is the right one. As demands on IT have intensified with the rise of trends towards mobile, social, and big data, customers are finding greater efficiency (inaudible) choice from cloud infrastructures where the private, public or hybrid cloud turns IT into service that we can utilize on-demand. This vision has guided our strategy since 2009 and we continue to hone our broad best of breed portfolio to enable IT as a service both on-premise and off. Adhering to this vision well also continuing to address customers broadly varied needs as they transition next generation infrastructures has enabled us to continue to gain market share. In Q1 we believe these share gains continued with growth across all segments and all our GOs including solid 10% growth from our break for 13 markets. Today dynamic environments requires IT to be able to respond to constant change which is why flexibility and choice are such high priorities of the customers. Businesses require IT resources that can scale on demand, can handle a variety of workloads and can be trusted at all times. Choice is a key value proposition of EMC offers. The (inaudible) structure…

Thank you David. I would like to begin by adding my welcome and thanks to everyone attending today’s conference call. It's good to have you with us. Overall I was pleased with our results and our execution in Q1. As the quarter came in in-line with our expectations. That said we found the bookings flow this quarter to be quite back-end loaded. In other words we experienced a high level of hardware and software bookings in March especially in the last two weeks. The very good news is that our supply chain, our factories and our distribution teams executed flawlessly. The main reason for the late bookings this quarter is that customers are still being very cautious with their IT spending for sure most orders are subject to greater scrutiny and many enterprise are now requiring a higher level of executive sign-up before they give final approval. (Inaudible) this caution has been fueled by the continuing tide of political and economic uncertainties. Additionally when you look at the organic growth profile of other IT companies, I believe you will understand why we believe we executed well. I would like to publically think approximately 59,000 talented people from EMC and VMware for their hard work and their dedication. They had more color about the quarter. On a geographic basis we experienced growth in North America, Latin America and in Asia-Pacific including Japan that was greater than our overall rate of 6%. In EMEA we experienced very modest growth while in Japan we declined slightly on a constant currency basis. From a vertical market point of view, we saw strength in high growth for our service providers. We saw a good growth in the financial services and healthcare industries and we experienced weakness in public sector and U.S. Federal. Looking forward, we…

Thanks Joe. Before we open up the lines for your questions, as usual we ask you to try and limit yourself to one question including clarification. This will enable us to take as many questions as possible. We thank you all for your cooperation in this matter. Evan, can we open up the lines for the first question please?

Yes sir. (Operator Instructions) Our first question today comes from Shelby Seyrafi with FBN Securities. Your line is open.

Yeah. Thank you very much. So, the question is for you Joe. It looks like the storage market has slowed down since the second quarter of 2012. And I am wondering you talked about political and other factors. I am wondering what are your thoughts about the movement to the cloud slowing down storage spending secularly and what do you think needs to happen to accelerate growth in storage?

Shelby, remember, we gave it I think both today a little bit in depth at the strategic forum we had in February, we talked about application workloads. And depending on where those application workloads are depending on when they are written, how they are written, really dictates what kind of storage it needs and where it could run. So the truth of the matter is, I don’t really believe – the cloud today has been a net benefit to us so far, but I do not know how many quarters in a row like I haven't been counting but at least the last four. We have said that our highest growth business has been to service providers. So we’re selling a lot of businesses, first of all cloud is not only public cloud, it's private cloud. We’re leading the journey to the private cloud and that is -- and of course when you put, let’s put it platform two type of applications into a cloud, you need storage which has a rich set of services which favors us. Our market share within storage is going up. I do believe you’re seeing a tremendous of shadow IT go to public clouds and that’s both good and bad, but good in that new things are tried; bad in that I think we lose -- the enterprises lose some control of the information, but over time, this will be I think net good, and we’re going to play in both in private and public side, and it's all about what we’re doing in terms of adopting HDFS with native, or scale-out NAS or object storage with Atmos, or a software-defined storage, stay tuned we’re going to do a lot of that at VMworld in a couple of weeks. Our flash program, so we have a great portfolio that plays both with the cloud and traditional data centers, and remember the cloud is both private and public. So, we do not see this as a negative trend for us.

Our next question comes from Brian Marshall with ISI Group. Your line is open.

Obviously when you look at consolidated EMC gross margins on a year-over-year basis, the trajectory is nice in a sense that it's improving year-over-year but when you break apart VMware as well as core EMC, it looks as though EMC actually declined from a core standpoint year-over-year in terms of margins, and so I think this is obviously atypical for you guys. I was wondering if you could talk about the key drivers of that year-over-year decline, and then is this a trend that’s going to continue throughout calendar ’13 if you can give any color there. Thank you.

I’ll start out. David is fighting a little bit of a voice problems here, but I mentioned how late Q1 came in, and in anticipation of that, because obviously we also said we had a late, not as late, but a late Q4, so that causes to say, okay but if it's going to be late, we need to build up more inventory. In the end when you get orders late, you need to buy different kinds of inventory, which when you buy inventory late in the quarter tends to cost you a little bit more. We have more people and more costs in the factories, we have higher shipping costs. Also our fixed costs are up a bit this quarter. We had -- our fixed costs grew faster than revenue due to softer capitalization, amortization, warranty, costs in manufacturing overhead. So, that’s kind of what happened to us. We told you very clearly, David stated it again today that we did not expect leverage in the first half of the year, we expect good leverage in the second half of the year and this quarter came in very close to our expectations, and I think when you look at it on the proverbial curve, I really think we had a good quarter.

Just to pick up where Joe left off, the fixed cost issues, we don’t expect this fixed cost to rise as much during the year. We expect our volumes in storage to increase, so that fact is going to become less of an issue going forward, so we do expect the EMC gross margins to increase sequentially during the year. We expect the consolidated company margin will be up year-over-year and that with the OpEx is whats is going to drive leverage in the business in 2013.

Our next question comes from Alex Kurtz with Sterne Agee. Your line is open.

Just following with the earlier question about the cloud, Joe it seems like there is an opportunity to take Symmetrix into some of these public clouds that you’re not in today. We get a lot of questions around AWS, why couldn’t Symmetrix be stripped down and reconfigured in a format that could allow a provider like AWS to provide a Tier 1, high end kind of service. Have you guys thought about that as a strategic direction for Symmetrix longer term?

One of the things David alluded to, I don’t think he alluded to it, he actually said it in his remarks was the Cloud Edition of Symmetrix coming out and some many attributes that you mentioned will be front and center. So, obviously it’s a very -- Symmetrix has the richest set by far of functionality and software capability. And it’s doing well in the private side of the cloud, doing okay in the public side of the cloud, and we think there is a lot more we can do at that platform. So, stay tuned.

Thanks. Next question please.

Our next question comes from Keith Bachman with BMO Capital Markets. Your line is open.

Hi, Joe. This is definitely for you, not for David.

David said thank you, you just couldn’t hear.

Joe, I wanted to ask you about the strategy of having a company of companies and that is to say you have announced that Pivotal has taken some money from GE and will ultimately look to go public. VMware is a public company. And I am confused on why you are doing that. Originally, VMware I think was done at least partially to give currency for employee retention purposes, but in effect, you are adding to G&A and you are also deleveraging a consolidated global sales force. So, I am unclear about the strategy about why you have these assets. As a matter of fact, I can make an argument the spin-off of VMware really has an added value to the EMC shareholders and indeed today is detracting from the upside potential of EMC given the volatility in that stock. So, maybe you could just speak to why you continue to head down this path? Thank you.

Well, I think the major reason is you nailed it. When you see an opportunity as massive, as the big and fast data, the opportunity to build -- you have to be free to build an ecosystem that not only includes EMC and VMware in that case.

Right.

And I think you will see that come to fruition. There is a lot that I don’t want to go further, than I am going, but there is a lot of interest in what we are doing in Pivotal. On the other side, having a family stack also gives us a lot of cloud and credibility. Also when you get a company like Pivotal and you are going to make a huge bet on it having the EMC, let’s say good housekeeping seal of approval on it, and our balance sheet and working together with our sales force and our capabilities gives customers a lot of confidence to try something newer, if you will. So, I think there is great benefits, but the biggest benefit is that, you have this ability to attract an incredible talent pool under the Pivotal stock if you will, having a leader like Paul Maritz, having a company with the prestige and the trust they have for the investor and that has core owner and partner. And so it’s – I think it’s a great way to go. You are right, there is sometimes when VMware was adding a lot of value, now it’s got a little more volatility. But I think when this all plays out, and the software-defined datacenter and the hybrid cloud, and what we are doing in storage and what we are doing in security, and what is happening on big and fast data and the platform for the next, I mean, these are assets that most companies would kill for. So, when you look at our strategic play and you look at the opportunities of the third platform, the third grade platform of IT is going to present. That’s what we are aligning for. Over time, there will be a lot of different ways we can get you can look to monetize things, but I think we are on a great track right now because we are building up a great set of assets and tremendous leadership capability. And people are excited as heck, in any of those companies including EMC, including Pivotal, including VMware.

Alright, thanks guys.

Thanks. Next question please.

Our next question comes from Andrew Nowinski with Piper Jaffray. Your line is open.

Okay, good morning. Nice quarter. Just had a question on the VNX, the mid-range, I know you are calling it unified now, but it’s been over two years since you launched the VNX, which I believe is near the end of your typical refresh lifecycle. So, regarding the 2% year-over-year decline, given all the chatter in the channel, regarding a pending refresh, did that have any impact on your unified revenue this quarter? And then could you also talk about the impact to sales cycles when you introduce new platforms? Thanks.

Well, I think we have done everything, but say it’s I’ll probably say more than I am supposed to say, and David is cringing here because he wish he could talk about it. You are exactly right. There is, and I am not going to give the date, but in the second half of the year, okay. There is a considerable refresh and cycle really positive product cycle for the VNX and I think that’s what product cycles are all about. They wouldn’t be cycles if that didn’t happen, we’re near the end of the life, things do slow down and anticipation of the new one. So are we experiencing some of that now? Of course we’re.

Our next question comes from Maynard Um with Wells Fargo. Your line is open.

Can you just talk about the channel? It seems like with you got a broadening portfolio, more work specific needs, you got more competition. The complexity just seems to be rising so can you just talk about how you get the channel to commit and do you feel like you need to be more aggressive from an incentive perspective because of that or you kind of feel like the direct sales force becomes more important in this industry landscape. Thanks.

I think it's not an ore, you asked the question as an ore I think it's an end. I think the companies that will fair best which is certainly what we’re committed to do, focused to do are doing is to have a strong direct sales force that works in harmony that is comp neutral to work with a growing and vibrant channel. And when you do both and you’re right about one point you have to worry about your channel because it's infact an extension of your selling capability and you have to worry about their profitability. You have to worry about how they are trained properly, are they providing value to customers. So all those things go into the mix, but we’re incredibly committed. I couldn’t be more committed to channels than I’m and I think that channels and direct sales force is if you had your comp plans right and we spend a lot of time on a comp or best plans.

Have you changed the way though, you’ve incentivized the channel at all kind of given all the changes that’s been happening.

We continually change. Is there a specific area?

I’m just wondering if I guess there is more pressure related to those gross margins where there is more pressure because of the incentivization of the channel.

I don’t think that’s because we find if we can get a channel to invest, invest insight sales, invest in around knowing our technology, invest in field sales and support. The margins through channel are quite good because when you look at operating margins you can get maybe a little bit less gross margin but again you don’t have as much selling cost because our sales force has I have a trusted partner. I will turn it over to them and I will go do something else and when you get a channel that do the lifting it turns out positive and it's actually net-net margin neutral.

Our next question comes from Amit Daryanani with RBC Capital. Your line is open.

Just want to touch on the flash solution that you guys launched. I believe it was supposed to be GA sometime live in late Q2, early Q3. Probably when you look at the intake so far that you have had for XIO and the PCI solutions can you talk about are these products help you gain new customer relationships or new channel relationships or is more about solutions to existing customers so they don’t look at other vendors and then longer term how big you see flash become as a percent of EMC storage portfolio.

So the XIO is in what we calling right direct availability which means it's available for sale to select customers where we have a defined plan we both redo. I would say that’s a combination of existing and new. Obviously there are a lot of customers looking at flash generally and I have got flash solutions in front of our existing customers so they can really look at those strengths because we do believe the XIO is very different and very new in terms of becoming a major piece of revenue. The flash products we introduced you all are brand new and they are really not contributing anything now. They are going to start contributing to the emerging product segment in the second half. I think you will see them contributing to the (inaudible) business more broadly in 2014.

Our next question comes from Kulbinder Garcha with Credit Suisse. Your line is open.

I have a question and just going back to the gross margin. I guess one of the thing is first hand that we have seen in the information storage side, gross margins decline year-on-year in sometime and I take your point Joe that there was some…

You’re really fading.

So my question is on the information gross margins and I take the point of the quarter was late and there were some costs also came in as a result impacting it up. But is this first time that down year-over-year I’m just wondering Joe anything that you see really change in the competitive environment over the last few months. And specifically are you seeing any impact from not necessarily the NetApps of the world, but from the newer startups being more aggressive, I think, and nimble, for example, are seeing some really good traction in the market. And they often talk about targeting both yourselves and NetApp I am wondering has anything changed there that could be explained in this as well or is it simply just the cost basis you mentioned?

There is a tremendous amount of noise out there but I could tell you, most of our competition is coming from our traditional sources whether it would be one of the server vendors that also sell storage, whether it would be from the big but traditional established storage players Hitachi, NetApps, etcetera. There is lot of noise being made by these new startup crews, but in realty that’s just not what we are facing. You keep coming back to how much of business is like an Amazon stealing. I still think it’s basically customers being cautious. The customers are for sure sweating their assets more is the term we use. They are keeping them longer. We see that in terms of how long we have very genealogy in all our products. We know how long they have been out and every customers what drives them etcetera, etcetera. For sure customers are keeping their assets longer. For sure the industry right, us leading industry is giving them better tools compression, deduplication, better ways to do copies or snaps or clones more efficient, thin provisioning and I keep going on and on. And then software defined storage have given another set of capabilities. So, I really think that’s more what you are seeing is the cautioning customers they use our term sweating their assets longer and the fact that we have given the industry and others – our industry has given tremendous benefits in terms of utilization tools and productivity tools within storage. And that’s – and I think that’s what you are seeing right now, combination of those two things.

Thank you.

Thanks. Next question please.

Our next question comes from Abhey Lamba with Mizuho Securities. Your line is open.

Yeah thanks. Joe, I just wanted a question on flash products. Well, can you talk a little bit about what do you expect sales cycles of those products to be worth as what we have seen for the other storage solutions and also where are we in terms of customer demand and channel readiness and the sales force readiness from you in terms of pushing those products?

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Okay. Thanks. Next question please.

Our next question comes from Scott Craig with Bank of America-Merrill Lynch. Your line is open.

Hey, thanks. Good morning just on the free cash flow as you think about the usage going forward and this kind of relates to Keith Bachman’s question a little bit. But how do you think about strategically buybacks and distributing that between EMC, VMware and then you are going to have Pivotal out there as well because clearly some analysts would rather see buying back more EMC stock as opposed to other entities. So, I am just curious how you strategize that use of free cash flow amongst the entities you are building out and just in general? Thanks.

Let me make just a couple of comments on that, but I will make them very hard and very succinct. I want to assure you that this area is in a very active discussion with our Board, very active. I also assure you we are committed to increasing I will repeat the word increasing our return of capital to our shareholders going forward. And I want to leave it there for now, but that is very active and we’re going to increase our commitment.

Our next question comes from Steven Milunovich with UBS. Your line is open. Steven Milunovich – UBS: Could you talk about the cloud of that more specifically storage as a service? In private cloud you doing managed services. Could you explain kind of what is? How that works at some point the future you might actually have to take assets out of your balance sheet or you will just basically kind of run storage for your enterprise customers and then in the cloud obviously you’re having some success selling the service providers but some of the ones we talked to do indicate that having branded EMC type equipment is a little less important than it used to be. Some of them are dusking in their storage technologies potentially and that’s like in about a Google or Amazon but more of the (inaudible) marks of the world and what are you running into in that part of the world as well?

We laid kind of two different questions on the managed storage services side our method is, we let the customer make the call. So in other words we will basically go into our customer site and manage their state on their premise that they walk. Number two we will basically say we will manage it on your site. It will be our asset, there are cases where we have bought back some equipment and put that in the equation also. There are phases where the customer wants to manage but they want us right by their side. So the customer base we can dial it in at any place there. The difference is we don’t take it off-site we leave it on their site or one of their service provider sites. There are service providers we also run that service for. And then of course what you’re talking about is our service providers that run dual strategies several of them where they will offer some enterprise, they will offer enterprise storage and maybe to compete with Amazon on their higher end last to cloud, last to storage services where they call but they have the higher end services and they will build more their own or use or utmost we see both of those happen. It can be more with Amazon as three. So all those things are happening Steven and we basically as part of what we’re doing was offered fine storage as part of what we’re doing at most is part of what we’re doing with scale and liner very focused on convincing a lot of the service providers. We got pretty good success that with our expertise we can do that for them or with them very economically and very efficiently and they can use the fire power in other areas.

Our final question comes from Ben Reitzes with Barclays. Your line is open. Ben Reitzes – Barclays: I wanted to ask about the second half and just a little more about your confidence, you have new products coming and there might be another quarter of cause in the second quarter. So we have to have quite a bit of acceleration in the second half. If you can just talk a little bit more about maybe specifics and also may be throwing some geographic color maybe does Europe get better as well because I noticed that was pretty slow in the quarter. Thanks.

You know 6% growth I think if you look at the curve it's hardly a cause but I understand your point. We have to accelerate the second half of the year. As far as your comment on Europe I don’t think anybody is smart enough to call what Europe might or might not do so certainly I would say we’re not counting on getting a whole lot worse but we’re not counting on getting a whole lot better either. It will be what it will be, I hope it gets better. What we’re really counting on is very much a product cycle. We know good things happen when we put good products out. We will delay products rather than put anything that’s not ready for prime-time. So we have a pretty very good handle on this second half map and we think it's going and remember when you think about last year we grew 11% from memory but David is saying that he can’t talk so he wants me to do all the work, see if I still know the stuff. We grew 11% in Q1; we grew 10% in Q2 last year. We grew six and then eight and so obviously the comparison the second half are easier, because we were comparing to 10 and – 11 and a 10, we got to compare to a 6 and 8. So, that helps you too. So, as a combination of that, the product cycle and every day the team gets more confident, and I am really pleased with our progress. So, thanks for asking that, Ben.

Yeah, thanks Joe. Thanks for saying you love me too. I need it on a day like on the tough tape. Thanks.

Well, I will just do a little close here and Tony is giving me the signal or am I supposed to say Tony, you are supposed to ask me to close.

Why don’t you so?

I have been doing so much talking and I am just keep going in. But anyway, I think all of you for being with us. David is not putting us on. He really right after he taped yesterday for hardly talk and he does a great job and I am just thrilled to have him as a partner. But in summary, we truly believe that our cloud, our big data, and trusted IP strategies are really well placed. And they are more important there to be and where we see it by our customers and our partners. I think we beat this over the head too many times, but we are very excited about our 2013 product roadmap, be it most what that most roadmap does fall into the second half of the year. So, we are particularly excited about the second half of the year. I am just proud and privileged to work with a great team. I believe we have momentum and we are excited about our prospects to grow and take share in 2013 and beyond. And hopefully many of you will join us either virtually or in person at EMC World which is in Las Vegas on May 6 and 9. And again, thank you very much for being with us. We really appreciate your interest in EMC. Have a good day.

This concludes today’s conference. You may disconnect at this time. Thank you.