EMC Trims Staff Levels Despite Record Revenues

EMC is laying off 2,400 workers, about 7 percent of its global 41,900 employee workforce, in a move to help ride out the economic recession.

Yet unlike many of its peers who are reducing staff, EMC (NYSE: EMC) shows few overt signs of suffering from the global downturn.

Instead, the top storage player said it’s on track to post record quarterly revenue growth that will see it meet fourth-quarter Wall Street expectations. In a statement, EMC said fourth-quarter 2008 revenues would total about $4 billion, representing 4 percent growth over the same period a year ago and an 8 percent increase compared with the third quarter of 2008.

For the quarter ended in December, EMC said it expects to report adjusted earnings of 23 to 24 cents per share. Analysts polled by Thomson Reuters are expecting 23 cents per share.

Despite its strong quarterly figures, EMC said it’s undertaking staff reductions to ensure it stays ahead of the downturn. The staffing cuts are expected to reduce expenses by $350 million in 2009 and $500 million by 2010.

“We’re coming at this from a position of strength. It’s not unusual in this economy for companies to modulate their workforce and cost structure,” an EMC spokesperson told InternetNews.com. “In EMC’s case, we’ve approached it through a series of targeted initiatives across the business, at all levels. We intend to carry our success through the downturn and emerge even stronger.”

The news comes as other tech titans struggle more visibly against the ongoing recession, which sparked layoffs and cutbacks throughout 2008. The list includes Yahoo, which planned to layoff off 10 percent of its workforce by late 2008; Motorola, which slashed over 7,000 jobs last year, and Sun Microsystems, which announced a headcount reduction of 4,000 to 5,000 positions in early 2008.

Even Microsoft (NASDAQ: MSFT) is rumored to be cutting staff due to the economic headwinds.

Storage stands out

Throughout 2008, many storage players appeared be somewhat insulated from the economic pain hurting other technology sectors. One reason is that experts say the industry has been reaping the rewards of enterprises’ increasing need to cope with both growing amounts of data and mounting regulatory requirements.

EMC’s last layoffs took place in 2007, when it cut 1,350 jobs, citing a need to reduce overlapping staff that resulted from a three-year string of 21 acquisitions.

[cob:Special_Report]This week, it said its newest round of cuts are aimed at consolidating back-office functions and field and campus offices, reduce management layers and cut indirect spend on contractors, third-party services and travel. The reductions will take place across its Information Infrastructure business, according to the company. They will not impact VMware, which it acquired in 2003.

EMC is also coming off a strong year of more strategic acquisitions and new product launches. Early in 2008, it snapped up smaller storage vendor Iomega, which gave it a strong channel door into the home office and small office markets.

EMC also focused heavily on rolling out new offerings in 2008. Late in the year, it unveiled its highly anticipated cloud storage platform, Atmos, which had been in development for two years.

EMC said it would provide further details of the cost reduction effort during its fourth-quarter earnings call, which is scheduled for Jan. 27. At press time, shares of EMC were trading up 7.5 percent, at $12.02.

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