Going against the grain of tech companies, EMC says it met its revenue forecasts last quarter. Still, EMC is joining the legions of corporations who are laying off workers.
EMC made both revelations in a release Wednesday after the market closed. Despite its sunny results, it added to the unemployment gloom by saying it would cut around 2,400 jobs – 7 % of its headcount – by October. The layoffs are part of a restructuring that EMC hopes will save it $350 million this year and $500 million next year. According to the release, the restructuring will “consolidate back office functions, field and campus offices; rebalance investments towards higher-growth products and markets; reduce management layers; and further reduce indirect spend on contractors, third-party services and travel.”
It will be interesting to see what impact this will have on EMC products that don’t fall into that higher-growth category.
As for the fourth quarter, EMC said it expects to report revenues of around $4 billion, which would be around an 4% increase from last year and a bit higher than financial analysts expected. It gave no details on what products performed well, but the release comes at a time when storage and overall IT sales forecasts look dim and follows announcements from LSI and Emulex that they failed to meet expectations last quarter. EMC will give more details when it officially reports its earnings Jan. 27.
In a note to clients today, financial analyst Kaushik Roy of Pacific Growth Equities wrote that he believes storage vendors Brocade and QLogic also lived up to expectations last quarter, but “we are cautious about NetApp.” Roy also wrote that EMC’s results show “that the end-demand for storage remains relatively healthy. … The storage market appears to be holding up better than other sectors of IT. Compliance and disaster recovery/business continuity remains a big driver for storage spending.”