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EMC Posts Q1 Loss

Data storage giant EMC posted its third consecutive quarterly loss as cautious corporate customers continue to delay purchases.

The Hopkinton, Mass., company maintains it will return to profitability in the second half of 2002, as cost cutting counter-balances sluggish sales.

EMC lost $77 million, or 3 cents per share, in the first quarter, compared to a profit of $399 million, or 18 cents per share, a year ago. The numbers were helped by a reversal of a third-quarter restructuring charge. Without the credit, the company lost $97 million, or 4 cents per share.

Analysts surveyed by Thomson Financial/First Call expected a loss of five cents per share.

Revenue fell from $1.5 billion to $1.3 billion in the first quarter. The 14 percent drop

"The well for new application deployment remains fairly dry, suppressing demand for major new IT projects," said Joe Tucci, EMC's president and CEO. "Customers' purchasing activity during the first quarter was heavily focused on automating the management of their information and accelerating the consolidation of existing IT infrastructures."

A bright spot was that license agreements for the company's new AutoIS software applications increased four-fold over the fourth quarter.

EMC CFO Bill Teuber also said the company's cost cutting plan was a quarter ahead of schedule.

"We have reduced the company's quarterly break-even level by more than $200 million over the last nine months," Teuber said. "This progress contributed to an increase during the first quarter of more than $200 million in cash and investments, bringing our total cash and investments to approximately $5.3 billion."

At the same time that EMC is making internal changes, it also faces stepped up competition from IBM and Hitachi .

Earlier this week, the two companies announced a joint venture to produce hard disk drives. And today, Hitachi sued EMC over alleged patent infringements. The legal action comes after EMC sued Hitachi on similar grounds.

Shares of EMC rose 0.761, or 7 percent, to 11.161 in morning trading. In the last 52 weeks, the issue has ranged from 9.66 to 45.96.