EMC Cutting Jobs to Trim Costs
EMC Corp. said Tuesday that it would cut 1,100 jobs, or 4% of its work force, as the data storage systems maker trims near-term costs in an effort to meet revenue growth targets and add market share.
The company said it would post a one-cent charge in the second quarter for the job cuts and redeployments of certain staff into quota-based sales positions, part of the company’s efforts to increase its market share.
About three-fourths of the job cuts will be made in the U.S., the Hopkinton, Mass.-based company said.
The measures target costs built in when the company anticipated revenue growth of up to 35% this year, a level EMC has since trimmed to about 20% because of the slowing economy and the dot-com shakeout.
EMC spokesman Mark Fredrickson said the company continues to expect “modest” earnings-per-share growth this year.
The announcement came after Goldman Sachs computer hardware analyst Laura Conigliaro cut her 2001 earnings estimate on EMC to 76 cents from 81 cents and her 2002 estimate to $1 from $1.05, citing a lack of notable improvements in the U.S. economy, slowing growth in Europe and tough pricing.
Conigliaro cut her estimate of revenue growth this year to about 14%, down from her previous estimate of 18.6%.
“We think the quarter started out tough and has generally remained that way,” she wrote.
Shares of EMC, a technology sector bellwether, fell $3.11, or 8%, to $33.99. Since the start of the year, EMC shares have fallen 49%.
EMC, which designs memory systems that manufacturers, banks and government agencies use to store and retrieve data, said the job cuts would occur over the next several weeks and leave its head count by midyear at about 23,300, on par with levels at the start of the year.
Targeted in the job cuts are overlapping positions in its field operations and employees at its corporate headquarters and international segments.
The action also includes trimming use of consultants and contractors and delaying facilities expansion.
EMC said its long-term strategy still calls for growth in staff as it fights to increase its share of the information storage market, which EMC said could reach $50 billion this year.
The company said it expects to invest $1 billion in research and development this year and is investing heavily in its internal information technology infrastructure and looking for areas in which it can build talent. The storage sector traded lower on the coattails of industry leader EMC.
Emulex Corp. fell $3.85, or 9%, to $38.30, Network Appliance Inc. dipped more than 12%, or $3.18, to $22.54, and Brocade Communications Systems Inc. lost $5.31, or 11%, to $41.16, all on Nasdaq.
