Amid a number of similar warnings about decreased sales, EMC Corp. late Thursday said it would have to cut 7
percent of its workforce, or about 1,350 employees, as the firm now
estimates that it will not reach profitability for the second half of the
year.
The Hopkinton, Mass. storage giant expects total revenue to be about $1.25
billion, for a loss of 2 cents per share. This 3Q loss compares with a loss
of a penny per share in the second quarter of 2002.
While the firm claims it made progress in its cost reduction efforts, it
said the continued weak outlook in IT spending forced EMC to initiate the
layoffs, which will bring its total workforce to about 17,000 employees.
That head count is down from a peak of 24,500 early last year. It is not yet clear how many of the approximate 7,350 employees in Massachusetts will be affected in this round, the third major job cut for EMC since the beginning of last year.
In discussing the actions, EMC President and CEO Joe Tucci called the IT
spending environment “brutal.”
“In fact, it got even worse at the very end of the quarter,” Tucci said.
“Our third quarter was on track until late September. The harsh reality of
reduced budgets and the uncertainty of the economic and geopolitical climate
are weighing heavily on business confidence, causing key projects and the
corresponding IT spend to be delayed.”
EMC also said that its board of directors approved a buyback of an
additional 250 million shares, to be initiated after the release of the full
quarterly earnings on October 17, 2002.
EMC competes with the likes of Dell, HP, IBM and other systems
vendors in the data storage hardware and software markets. The firm has been
making headlines as of late, buying up storage software maker Prisa Networks
and upgrading its automated network storage software in recent weeks.
A Deutsche Bank research note said EMC can rely on its strengths in the rough and tumble business climate — a strong balance sheet, an installed base of more than 250,000 storage platforms and healthy cash flow.