Datamation Logo

EMC Profit Drops 33%, Layoffs Loom

October 18, 2006
Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

EMC (Quote)  Tuesday said third-quarter revenues dropped a third from a year ago and vowed to cut roughly 4 percent of its workforce to make room for its 21 acquisitions of the last three years.

EMC, which has spent the last few years broadening its portfolio to include software for virtualization, security and content management, said its profit fell to $283.7 million, or 13 cents a share.

This is a 33 percent drop from the $421.7 million, or 17 cents a share profit from a year earlier.

To improve operations, the Hopkinton, Mass., company said it would cut some 1,250 employees by the end of 2007 from its workforce of about 26,500.

Cuts will be made worldwide in management and other areas where redundancies exist, although none will come from EMC’s VMWare virtualization software group.

From this restructuring, EMC estimates that it will record a pre-tax charge of between $150 million and $175 million, or 6 cents per diluted share in the fourth quarter of 2006.

Lamenting the layoffs on a conference call this morning, EMC President and CEO Joe Tucci said the company’s approach is not to “break a company” by shedding core assets such as people.

However, he said these cuts were necessary.

Asked to provide more color about the cuts, Tucci refused, noting that most of the people affected are just finding out today.

There were silver linings, too.

EMC, which competes with IBM (Quote), Hitachi Data Systems (Quote) and HP (Quote) in the storage market, said Q3 revenue did rise 19 percent to $2.82 billion from $2.37 billion in Q3 2005.

David Goulden, executive vice president and CFO of EMC, said on the call this is thanks to strong demand for new Symmetrix DMX-3 and EMC Clariion CX3 storage arrays, VMware products and Smarts resource management software.

Systems revenue in Q3 was $1.3 billion, a 19 percent increase from the year-ago period.

That’s an improvement from Q2 in July, when the company reported only an 8 percent increase in systems sales, which was the main culprit in its earnings shortfall.

Software license and maintenance revenue grew 25 percent to $1.1 billion. Professional services and systems maintenance grew 7 percent.

VMware, which has been EMC’s most consistent growth segment since the acquisition two years ago, grew total revenues 86 percent year-over-year to $188.5 million.

Smarts’ software license sales grew more than 100 percent for the quarter.

This article was first published on InternetNews.com. To read the full article, click here.

  SEE ALL
ARTICLES
 

Subscribe to Data Insider

Learn the latest news and best practices about data science, big data analytics, artificial intelligence, data security, and more.

Datamation Logo

Datamation is the leading industry resource for B2B data professionals and technology buyers. Datamation's focus is on providing insight into the latest trends and innovation in AI, data security, big data, and more, along with in-depth product recommendations and comparisons. More than 1.7M users gain insight and guidance from Datamation every year.

Advertisers

Advertise with TechnologyAdvice on Datamation and our other data and technology-focused platforms.

Advertise with Us

Our Brands


Privacy Policy Terms & Conditions About Contact Advertise California - Do Not Sell My Information

Property of TechnologyAdvice.
© 2025 TechnologyAdvice. All Rights Reserved

Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.