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MemoWatch Get touchy-feely with EMC and Lucent

'Dear all: Well done - we love you. PS: You're fired'

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EMC to chop 1,100 staff
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Anyone who has been following our LogoWatch campaign will doubtless enjoy the two internal emails below, distributed to all Lucent Technologies and EMC employees, respectively.

To recap, LogoWatch closely monitors corporate makeovers - the assumption being that such shennanigans normally indicate impending fiscal meltdown.

Well, Vulture Central has now added a further level of divination in MemoWatch. If LogoWatch is simply a bit of deckchair shifting, then MemoWatch is sobbing women and children in lifeboats and the band playing 'Nearer my God to Thee' while the icy Atlantic laps over the deck of the SS Dotcom.

Lucent and Alcatel recently participated in abortive merger negotiations. It all came to nowt. No matter, all is well:

From: LT Today NewsFlash
Sent: 30 May 2001 21:52
Subject: A message from Henry Schacht

********************************************************
LUCENT TECHNOLOGIES TODAY NEWSFLASH
Wednesday, May 30, 2001
********************************************************

In This Issue:
* A Message from Henry Schacht

********************************************************

Fellow Employees:

Yesterday, as you heard, we confirmed we had been having discussions with Alcatel about a possible merger.

Let me give you some perspective on how we got there. We had developed a strategic turnaround plan that was based on becoming a company focused on serving the needs of the major Service Providers worldwide. The plan envisioned selling or spinning off assets that did not meet this strategic objective and then re-establishing our sales momentum, lowering expenses, improving asset utilization and securing the necessary financing. That plan results in a good business.

We had made a good start on that plan. We began discussions with Alcatel because we felt it offered us an extraordinary opportunity to accelerate that plan and create a company with more immediate global scope and scale and a major opportunity for synergies.

In the last few days, when it became clear that this combination was not going to be constructed with the total sense of partnership required, we decided that it was in the best interest of our shareholders, our customers and all of us to go back to our original plan and pursue our own path. Therefore, we ended the discussions. From the outset, we evaluated the wisdom and industrial logic of our two companies as a merger of equals, never as an acquisition.

When the rumors came out, I wanted to tell you about our negotiations, but securities laws in the United States prevented me from having those conversations. It feels good to be able now to tell you what path we are taking.

From the e-mails I've received from you this morning, I sense a genuine relief from you that we are going it alone and not attempting a complicated merger. As many of you have said to me, we need to control our own destiny. We decided to do just that. So where do we go from here?

During the last six months, I have seen incredible spirit, dedication and determination among the people of Lucent as we have worked to get the company back on track. Sales are up, expenses are down, asset utilization is improving and we have the financing in place we need to run the business.

However, with the changing market conditions, the current rate of travel is not going to get us to acceptable performance soon enough. Therefore, we need to move quickly and vigorously to get better, faster. This will mean moving swiftly and surgically to a more focused global customer-driven company.

You will be hearing more about this new pace in the coming days and weeks. The second quarter showed we could put Lucent back on track - a good beginning. The Alcatel discussions are behind us. We must now focus all of our activities on getting better faster. We must pick up the pace.

In other words, we are going to lift our sights and increase our pace of achievement on each of the seven points of our improvement program.

Starting, of course, with a continued passionate concentration on our key customers. We must seize the initiative. We need and must have a sense of urgency about everything we do. We must change the way we live and operate to reflect the urgency required.

We must:

  • Focus on serving our largest and most profitable customers;
  • Work aggressively to reduce expenses - treat the company's cash as if it were our own;
  • Achieve more aggressive working capital targets through tight management of inventory and accounts receivable;
  • Reduce capital spending by carefully investing ourresources in the areas that will bring the most value for the company; and
  • Eliminate redundancies and streamline operations.


Customers all over the world have seen our renewed commitment in the form of a rejuvenated level of responsiveness. And we should all be very proud of that. The second quarter was a good start. Now is the time to build on the momentum of the second quarter and to get better faster. We have aggressive goals in front of us, but we have to advance those goals. It is time to pick up the pace, make the hard choices and move even faster toward our goals.

We have decided to go it alone, but to succeed, we have to accelerate from here. It's time to get on with getting better faster.

Thank you for the work you have done and the efforts I know you'll continue to do to help return Lucent to the company we all want it to be.

Sincerely,

Henry

********************************************************
Lucent Technologies Today is published by Lucent PR for the people of Lucent. It is not intended for external audiences.

Oh, sorry - we printed that before we read the disclaimer. We're sure that the above will enable all Lucent employees to sleep sounder in their beds.

As for EMC, don't worry if you're about to be invited to walk the plank - Joe Tucci can assure you that you will be treated with dignity:

EMC CONFIDENTIAL

To: All EMC Employees
From: Joe Tucci
Date: May 29, 2001
Subject: Growth and Costs

It's hard to pick up a newspaper or turn on the TV without hearing new speculation about the extent of the economy's problems and the prognosis for recovery. One day the signs are good, the next day there is more gloom and doom. In our business, we are seeing encouraging signs of customers' IT budgets firming up in some places while still being rationalized in others.

Over the past few years, EMC has sped through a period of unprecedented growth and profitability. We have more than doubled both our revenues and the size of our employee population in less than three years. In doing so we have opened up a big lead in the most promising part of the IT market, and Wall Street rewarded us with one of the greatest runs any stock has ever experienced. Few major companies have ever grown as rapidly or become as big in so short a period of time. But rapid growth inevitably carries a downside, which is difficult to see while it's happening - increasing spending patterns that result in a cost structure that can become unhealthy if growth slows. This spending is committed with the best intentions, but when the economy forces you temporarily into a slower rate of growth, it really begins to show. We can all think of examples - everything from hiring too quickly and compromising our standards to sending more people than needed on a business trip, from too many big black cars and logo golf shirts to overuse of consultants and cell phones. If we all spent the company's money as if it were our own, EMC would be an even stronger company.

We have been taking a number of steps to lower our cost structure to better reflect our expected 2001 revenue growth rate. We must do this while ensuring that we continue to invest in extending both our technology and market share lead, in maximizing stockholder value, and remaining one of the best and most rewarding places to work. Our senior management team will outline specific steps for each respective organization, and I expect full cooperation in implementing them efficiently and fairly.

The most difficult and painful element of cost reduction comes when we are forced to eliminate jobs. Regretfully, we will reduce the size of our worldwide employee population by about 1,100 people, or about 4%, over the course of the next several weeks. This will leave us with about the same number of employees we had when the current year began. Several hundred more people will be redeployed into quota-carrying sales positions. Employees affected by this reduction will receive fair severance packages and other benefits. Everyone will be treated with dignity. We appreciate the work they have done to help get EMC to the leadership position we are in today.

After the hypergrowth of the dotcom bubble, nearly every major IT company has been forced by a slowing economy to reduce its workforce in recent months. At Cisco, the number is 8,500 people. At Intel, 5,000. Dell is cutting 4,000, HP nearly 5,000 and Compaq 7,000. Just as EMC's business has been less severely affected by the slowdown than virtually any other large vendor's, we have been able to avoid the deep job cuts experienced by others.

The reductions are being implemented in a number of areas throughout EMC, with particular focus on eliminating redundancies and overlaps in certain field operations, trimming the size of several corporate functions, and continued reduction of the resources supporting the managed decline of the server business inherited with the 1999 acquisition of Data General. Other cost-cutting measures include reducing the use of consultants and contractors, lowering travel expenses and delays in some facilities expansion. This activity includes the elimination of some costs that were built in anticipation of higher 2001 revenue growth, before the impact of the slowing economy and the disintegration of many Internet-related companies that had been making substantial information infrastructure investments throughout 2000. Aggressively reducing costs in many areas helps us avoid letting more people go than we absolutely have to.

We will also be increasing the number of quota-carrying sales representatives and systems engineers around the world to help address our large available market and serve our customers, through both new hiring and redeployment. We will continue to increase our investments and do selective hiring in engineering and customer service, as well as investing heavily in our internal information technology and looking for talent enhancement opportunities in several other strategic areas.

Regardless of the economic hesitation, the opportunity in front of us is still the most promising in all of IT. I wouldn't trade places with any other company. I am absolutely convinced about two things: EMC's leadership position in information storage is significant and growing; and leaders are always in a much better position than their competitors to use economic slowdowns to their advantage. To take advantage of this opportunity, we must intensify our efforts on the expense side of the equation to complement the tremendous energy we are putting into the growth side of the equation. I am certain you will rise to the challenge.

Thanks to all of you for your continued hard work and dedication to EMC.

Joe

Oh, right. It's all perfectly clear now. The management is not to blame - we just spent too much money on logo golf shirts for overpriced consultants. Quite so.

Well, Joe and Henry (hope you don't mind us using your first names), make a note of this for future reference:

Dear employee,

I'm sorry to say that that the managment has conceded that it couldn't organise a piss-up in a brewery. Therefore we have decided to sack ourselves. We will be handing back our logo golf shirts and mobile phones on our way out of the building.

Thankyou for all the tremendous energy and commitment that you have focused on redirecting our core business mission statement into project-critical client service penetration. Without your vision we would not be the big swinging dick of the IT world that we currently are.

You are all invited to join us on the forecourt at 4.00pm for a big group hug.

PS. You're all sacked too. ®

Bootnote

This is not the first time that our attention has been drawn to an EMC email. Have a look here for a class example of corporate bum licking.

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