Welcome, and thank you for standing by. At this time all lines are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. (Operator Instructions). Today's conference is being recorded, if you have any objections, you may disconnect at this time. Now, I would like to turn the meeting over to Tony Takazawa, Vice President, Global Investor Relations.

Thank you, Sherry. Good morning. Welcome to EMC's call to discuss our financial results for the Fourth Quarter and Full Year 2006. Today, we are joined by Joe Tucci, EMC's Chairman, President, and CEO; David Goulden, Executive Vice President and CFO; Bill Teuber, Vice Chairman, and Frank Hauck, Executive Vice President of Global Marketing and Customer Quality. We will go through a few prepared remarks this morning, and then after those remarks we will open up the lines to take your questions. Today's slides contain important information that is necessary to understand our results and commentary. So, we strongly encourage you to view them on EMC's website at EMC.com. An archive of this audio and slide presentation will also be available following the call. 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 US Securities and Exchange Commission. In addition, all of the numbers we discuss today will be presented on a GAAP basis, unless otherwise indicated. We are focusing on the GAAP numbers in an effort to simplify the discussion for you. For those of you interested in analyzing the non-GAAP numbers, we continue to provide a schedule in the press release that will help you adjust the GAAP results for stock options, restricted stock, and amortization expenses. And we would like to point out that David is a bit under the weather this morning. But I am going to hand it over to David right now. So David.David Goulden: Thanks Tony and good morning. Unfortunately, I have been under the weather. As you see here I completely lost my voice. So I am going to save a little voice I do have for Q&A, and I have asked Bill Teuber to take you through my prepared remarks this morning. Thank you.

Thanks David. Good morning and thank you for joining us today. I am going to walk you through our Q4 and 2006 financial results, and then our business outlook for 2007. Looking across our business, we are very pleased with our Q4 performance. We had strong bookings quarter and achieved the seasonally normal increase in backlog in Q4. Let me go through the numbers in more detail. The Q4 revenues were a record $3.215 billion, up 19% from Q4 last year, and $55 million higher than our guidance on the Q3 earnings call. I will say, the new security division of EMC added approximately 5 percentage points of growth this quarter. Q4 GAAP earnings per share were $0.18. This includes a restructuring charge of $0.06, $0.05 of tax benefits from audits from prior years, and $0.02 of tax benefits from a catch-up in the tax rate for the first three quarters of 2006. I will discuss these adjustments in more detail later. Excluding the restructuring charge and tax benefits, Q4 EPS were $0.17 or $0.02 higher than our guidance on the Q3 earnings call. This $0.02 improvement is comprised of approximately $0.01 from a lower tax rate in Q4 than the 26% we estimated, plus some favorable impact from the financing we completed in Q4 and approximately $0.01 from better operating results. For 2006, revenues were a record $11.155 billion, up 15% over the $9.664 billion we reported in 2005. EMC's new security division added approximately 1 percentage point of growth for the year. As shown in the slide in front of you, 2006 GAAP earnings per share were $0.54, up 15% over GAAP reported earnings for 2005. Excluding one-time IPR&D, tax and restructuring items, 2006 EPS was also $0.54. This is 35% higher than the $0.40 achieved in 2005,…

Thanks Bill. And let me add my welcome for all of you who have joined us for today's conference call. As always, thank you for your interest in EMC. I was proud of EMC's overall performance in Q4, without a doubt it was a solid quarter for us. A quarter that marked a strong finish to what I believe was a successful 2006. But to be totally candid, 2006 was also somewhat disappointing due to the inconsistent quarterly performance. While we grew revenues 14% year-over-year, excluding security and normalized EPS grew 35% in 2006 over 2005, our execution was choppy and not up to EMC standards. 2006 was the year of two distinctly different halves. In Q1, our performance was barely adequate, we follow that up with a clear miss in Q2. In the second half of 2006, EMC came to life, and without a doubt Q3 and Q4 were strong by any measure. And very importantly, we believe this positive momentum and energy that we built up in the second half of the year will propel us to a successful 2007, and that success will be brought by consistent performance. Bill did a good job of covering and commenting on Q4, in 2006, so let me jump right into 2007. For EMC, 2007 will be a year where we focus and execute on our core information infrastructure strategy, products and solutions. And over year, we focus and execute on a deeper integration in our development centers of our products and technologies, coupled with a deeper integration of our marketing, sales, support and services organization that bring these information infrastructure products and solutions to our customers and prospective customers. 2007 will be a year, we continue to focus and execute on a great success and massive opportunity, around VMware. And…

Thanks Joe. Sherry, can we open up the lines for questions please?

Yes, thank you. You have got a number of programs in place to the designs to help earnings, even apart from revenue growth. For example, you have already about $0.035 from doing that convert that you referred to, which was never really rolled to into street numbers post that deal, and you never quantified your one EMC program beyond the actual people related layoff, that how much that could save in '07 and '08. when we put all this together, isn't your at least $0.64 target number already extremely low and maybe you can help us with some of those savings.

Lets us see if David wants to comment or Bill wants to comment on any more specifics here Laura. What we have done is, we have said at least $0.64, we have said at least $12.7 billion, so it is obviously our goal to beat those numbers, but on the other side we want to make sure, that we have put out good targets and targets that we think are realistic, and as you have seen, I think 19% to 20% growth on the bottom line is positive and obviously we will work everyday to beat that number.

Laura, I will try to add, actually I want, but cant start talking.

Well, obviously Laura, there is some impact from our side is $0.03 impact next year on a GAAP basis now. So obviously that impacts some of the positives that you see there.

Thanks Laura. Next question please.

Our next question comes from Toni Sacconaghi of Sanford Bernstein.

Yes, thank you. Good morning and David I hope you feel better. In terms of this quarter, you didn't see the normal sequential operating leverage that you see where OpEx typically goes down 100 basis points or more as a percentage of revenue. Was that solely due to RSA being folded in which had the higher expense structure, or did you make some conscious investments to try and drive incremental growth this quarter. And then just related to that, you did -- I presume as you mentioned, there is an opportunity to consolidate some of that. You mentioned it was an accelerated plan, and you used that word deliberately. Can you give us a timeframe for the expected workforce reductions associated with that plan please?

Tony, thank you. We did pick up a higher percentage of operating expenses with RSA. So that's a fact. Also we made some R&D investments consciously in Q4. Relative to the accelerated plan, we just finalized that plan at the end of last year. We started the reductions and they will occur throughout 2007, they all will be able by the end of '07. In some cases, we need to consolidate some processes and systems before we can actually impact the people. That will occur on a pro-rata basis throughout the year.

Thanks. Next question please.

Bill Shope of J.P. Morgan. You may ask your question.

Okay, great, thanks. Quick question on the software segment, can you give us some commentary on the competitive landscape this quarter, we have seen results basically all over the place from your competitors, so I guess just a little color on the environment that will be helpful?

You are right, that's a good question. The results have been say, so much choppy, on a software side, so IBM have good quarter there was a number of companies that we were little bit disappointing. We obviously had a good quarter. I do believe there is opportunity out there, but I do think more than anything else, I think I have showed in IBM it shows with us. Rather than buying a point software solutions customers more and more want packages, bundles solutions sets rather than buying point products. And I do think that ability to do that we have that is really been driven into our sales force is going to benefit as more and more everyday and probably that's probably we saw in IBM, so that's my basic fear, my basic belief and a basic way we are driving EMC is that point products are driving customers not but if you can package these together, really make them solve business problems. It just the way we headed the game and that's what we were doing and that's what's given to our success. And the amount of multiple deals, most compound deals we have had is at all time high, compound deal was made a customers order stores they ordered management software from us and said they were a content management. So two, three, four, four types of -- four categories of kind of software they were ordering from us, because we have done a good job of putting it together. And in one EMC it means two things. One thing is how we work our product groups across what we are doing in Storage. So, not only -- by now having all the products -- related products, the highly related products in the Storage group together bringing some synergies, but is also the way we picked up at the Storage group, Product group work seamlessly with the Security group which work seamlessly with the Content Management would also works with VMware. So, that those things are getting as great benefits. And on the other side of one EMC, we have now combined our channels organization, so at one channels organization VMware outside of that, but other three groups is one channels organization, we have one global accounts program, we have highly coordinated our go-to-market. So, these things -- same things with services, we consolidated our services across those groups. So, it has given us both efficiency and a better way to present our solutions and that's resonating with all the customers.

Thanks Bill, next question please.

Next question comes from Shebly Seyrafi from Caris.

Yes, so thank you very much. So, you are not providing quarterly guidance anymore, but if you take the $12.7 billion annual guidance and multiplied by the high-end of your typical historical range say 23.2%, you get 2.9, $5 billion, little less than consensus. Are you sending a message there and maybe you can also talk about the pipeline in the backlog exceeding Q4 for the business?

Okay. Well, we gave you a hint revolving guidelines. We would encourage you to stay within the range that we gave you and looking if you want again in our transition. As we said Q4 was strong from a bookings point of view and we have a normal seasonal build-up in backlog in Q4. [Joe, if you want to join]?

I think Shebly, if you look at it, last time I looked consensus was 2.96. So, if you went at high-ends its 2.95, we are not telling you to go correct 10 million. We are just trying to say this is where we have been. If you look at -- they said 2006 a year or two has, we pretty much if you looked at our guidance while we are at the low end of our guidance we certainly are in the ranges of what we gave you. A year ago -- more than a year ago for 2006, we got there choppy but. And we will execute better on that but also if we look at the last bunch of years. It typically is as David said is been between 27.2 and 22.7 and 23.2 and that's we just wanted to kind of give you a hint that they were going to have normal kind of seasonality and -- but I am not -- we are not saying anybody to go back and change your guidance.

But you are going to have the full availability of the 4-Gig DMX-3, I would think that will help more than seasonally in Q1?

We [kept saying it] shall we bid, nobody seem to care. Even though they both were available in Q4. How many customers have -- they are not been caring, as lot of them haven't change their fabrics and it doesn't matter as much you think these high end machines are not like mid-tier, with the cashing ability you have you don't see as much benefit as you do in the mid-tier. So we don't think that can put us -- some of our competition made a big to do about it, but we didn't see it -- we didn't see it costing us a single sale. What I -- but I keep reading about analyst report and that's why through to my remark, so we got it out there now but I don't think that will help us up.

Thank you.

Next question please.

Aaron Rakers of A.G. Edwards, you may ask your question.

Yes, thanks for taking the question I guess mine is on more on the margin story playing out here. I believe a while ago you guys talked about ranges for gross margin 52% to 55% and also I think more of the leverage comes in the play in the SG&A line. Where you talked about 25% to 27% excess to revenue ratio, do you, I guess, can you give me some color on where the bigger the opportunity is for margin expansion? And do you see that SG&A long-term guidance of that 25% to 27% potentially coming into your provision in 2007?

Aaron, this is Bill. Since I talked about it and that was years ago, I mean, we come off -- we have not come off of that, but have gone away from line item guidance, that's got to be two years ago when we moved away from doing that. So, we have been talking about growing the top line and growing the bottom line faster than top line and gaining leverage for quite sometime. But even if you go back to last Analyst Day, I did talk about the individual elements of the income statement.

Well, I guess--

I will let David, jump in on.

Let me answer that. We may recall -- we are very focused upon operating a good leverage. And we are not going to tell you exactly where it's going to come from, but I will tell you certainly we're focused upon making sure it comes from a combination of margin and operating expenses. As Bill said, you should really look for spread alternately between the top line and the bottom line for the company.

And I will just add last bit color on it. The emphasis we have now in this company right down to the middle management on creating operating leverage is very, very significant and that's where are focusing. And we want to go to top line faster than we have been told you, so we gave you 14%. Our goal is to be that and we want to create significant leverage between that and the bottom line, and we have a number of factors both that will affect the margin and a number of factors that will affect the -- say SG&A below that.

Thank you.

Thanks Aaron. Next question please.

Keith Bachman from Banc of America.

Hi good morning everybody. I wanted to go back to cash flow if I could for a second. Last year being 2006 you reduced the share count by about 11% or fairly aggressive on your buyback. I think you said Bill in the prepared remarks you were looking more at a $1 billion target level, if I heard you correctly. I just want to A, confirm that; but B, just try to get some color on how or what are the key variables as you are thinking about your buyback and significant step down so to speak. Is it targeting more cash flow levels using your operating cash flow or can you just give us a little more color on how you think about the buyback, that will be great. Thanks.

Well Keith what I said was that we are going to spending at least 1 billion on the buyback this year. That's not -- that doesn't preclude us spending more, but that's what we are prepared to commit to right now.

And Bill is the reason for -- well perhaps you are just leaving some open end to do additional amounts, but I am just – clearly what the variables would be that would either cause you to exceed that or go inline with that?

There is a number of factors that come up during the course of the year. We look at obviously, we talked about tuck-in acquisitions, if we see something like another Avamar out there. We think this is going to be a terrific acquisition for us, cost you the same way. This is going to depend on what we see out there and sort of on the M&A front. Its also going to depend on where some of our cash is, whether its -- how much of its international. Clearly we have built up some more internationally as you saw at the low tax rate means our internationally business did quite well. That's -- you really can't excess that for buying back your shares Keith. So there is a whole host of issues that we have to consider as we look forward to that. We are confident that we are going to do at least a billion and as we get more aggressive on that line item we'll let you know.

Okay. Thank you.

Thanks Steve. Next question please.

Andrew Neff from Bear Stearns, you may ask your question.

Sure, just a couple of clarifications really. One the -- you said you're going to have the historical data for with a new write-down, where are you posting that? Second just to clarify is your annual guidance can be a rolling four quarters are you going to give the year than as you run out than next year you give the following year. And could you talk about -- the question I have is really can you talk about the relative profitability of the four groups?

I will take the first two. The annual guidance will be for year. So we'll give you '07 and this time next year we'll give you '08. In terms of the extra data we'll give you now on the earnings call as we have done today. And Joe the profitability of the business is one over to you.

Yeah. Obviously the three purer software businesses have better returns than the Storage business which has a combination of higher-end software in it, and as you saw they have higher growth rates and as David said we expect and as our plan to beat the growth rates collectively and would end by each business year. That's how it's been measured. So obviously if we do that when you saw 17% growth for security VMware 50, 50% plus growth opportunity in that market, 13% I think it was for Content Management, so obviously those businesses by definition should be -- will be a higher growth and better profitability.

Okay, thanks very much.

Andy, just one other thing, the new schedule for the fourth segment is available on the web with our press release today.

Okay. I will see it. Okay, great. Thanks.

You can download it in excel.

Thanks next question please.

Brian Freed with Morgan Keegan, you may ask your question.

Good morning. Thanks for taking my question. With respect to the VMware, it looks like its accelerated on a year-over-year basis, each quarter this year, this quarter over 100% year-over-year. Do you see this sustainable going forward and how do you see the competitive offerings from XenSource and Virtual Iron and their lower respective price points is impacting your VMware business.

It's really interesting, when I saw this, when we bought VMware, they thought the total market could someday potentially reach maybe $2 billion, now I am seeing multiples of that as an estimate for the market potential. You are not going to get a market this big and this hot, with out other competitors. That being said, as Bill said, they celebrate their 9th anniversary. These products are in their two-third generation. Tremendous ecosystem or partners that have built around it so, without a doubt, the market growth is going to be there, without a doubt there will be more competition. But I think, VMware is incredibly well placed and well situated and has a heck of a lead, and if we keep executing aggressively, we should be just fine.

Do, you think you can grow VMware as quickly in '07, as you did in '06?

Probably not, we grew 83 -- I forgot the exact, it was 83% to 86% something like that. So that would certainly not be our plan, but we definitely would like to keep up with the market growth. So there is no real great expectation like ITC was predicting $1.2 billion market, I don't know if that's late or not late, I think it probably is late, so I think there is more potential in that. So, obviously we, as the major participant there, we have great opportunity, but I think to sustain 86, while you never say never, is probably not in the cards.

Okay. Thanks.

Thanks Brian. Next question please.

Dan Renouard with Robert Baird, you may ask your question

Thank you very much and I have got some high level questions for you, Joe, lot of puts and takes in the industry -- and through '06, but may be you could just give us some more perspective on geography, specifically, what's happening in Europe and Asia? Thanks.

As I see in Asia, obviously Southeast Asia and China are still extremely hot. Japan is marginally better, I would say. Australia is a good market for us. We go to Europe, Eastern Europe and, we call [MESA], Middle East and Africa is very hot. In Central Europe, I think its going to be a thick better, than it was in '06, probably the US a thick softer, but put it collectively, I think its going to be a good year and US is definitely not going to be a bad market, its going to be a good market, but everything I see and all the surveys I read, point to a thick soft and we are a thick stronger in Europe, so pretty good balance.

Great, thanks.

Thanks Dan. Next question please.

Harry Blount from Lehman Brothers, you may ask your question.

Thanks. Joe, one of the key slide that you focused on was that 2007 is an year of an integration, focus and execution and obviously that's all good goals, but from a [steep] perspective, how are we going to see the progress on that? How are we going to measure it either from improved expense ratios and improved productivity? What type of metrics should we be looking at?

Well, we are going to give you pretty good reporting on each of the four business units and so you'll be able to see progress there. Obviously, if we execute one EMC, we should get efficiencies on the SG&A line. We should see more products from the market, which should reduce and accelerate its sales -- which should produce accelerated sales. And you have visibility into all of that. So, this is nothing -- this is just a -- either we think a more efficient and a better way to look at the business, we'll still give you good color in each of the business -- under each of the business units as we've always done. And so I think you will have plenty of opportunity as we do our quarterly reports to track our progress on those fronts. But One EMC is a huge initiative for us, huge.

Yes. That's what I am getting at, I am not sure yet. Though we have the understanding that the metrics that you guys are trying to benchmark, is R&D has been essentially flattish in an environment where your software business has grown, but your SG&A has kind of been moving in the wrong direction in last few quarters, so that's what I was trying get a bit of sense?

Well, its kind of -- R&D is flattish as a percentage, but its growing in finite numbers pretty well. But as we kind of combine many of the activities in sales and as we combine many of the activities in services and as we combine many of the activities in back office, it is just -- it is money we could save and we have -- not as diligently as we need to do, but after that in the past and we are incredibly focused on it right now and we have individual goals that's going to effect how people here get paid, rewarded and promoted. So -- I think you'll have plenty of visibility Harry.

Thanks Harry. We have time for one more question.

Thank you, our last question comes from Kevin Hunt from Thomas Weisel Partners.

Thank you, you had kind of mentioned on the security business, some appliances imply there will be some announcements in Q1, should we refer from that, that there is going to be some new products coming out along there? Like the security line?

I was referring to there is a lot of the major announcements -- well, first of all I said, we got tremendously robust in the storage business, talking about right in a second. Refreshed schedule coming up, so a lot of our new products will have the next generation announced. We will -- part of that this quarter we will do, as we will announce the efforts we've been working on for sometime, to build the kind of security that customers are crying for into their storage products, and those are one I was referring to, that would be announced [but obviously] there's things within RSA and things within Documentum and things within VMware where we will also announce, but that announcement there is kind of how we are using the RSA assets within our storage business. And that announcement will be coming up shortly here.

So just to clarify, so you are saying that, it will be embedded within new products or there will be separate products that you don't have today to come out?

Both.

Okay, all right, thanks a lot.

On closing, just let me again thank you very much for being with us, you got the message, because I heard you repeat it in your question. 2007 is the year we have to breakout and as far as year we are going to focus on integration and execution, I believe the IT spending environment is good, I believe the segments that we are focusing on storage, content management, security virtualization and the efforts we have done around energy efficiencies are going to pay-off big. I don't think we have ever been better positioned in recent, so I have been here. And this one EMC initiative is to drive financial leverage are real. So, thank you again, and I look forward to reporting consistently good results to you, as we go through 2007.

This concludes today's conference.