EMC celebrates record revenue, axes 2,400 heads
2008 is not 2009
Today, following the market close on Wall Street, EMC released preliminary financials for Q4, saying that it had approximately $4bn in sales and earnings. That's 13 cents to 14 cents per share, after taking away a 10 cents per share restructuring charge to cut costs in 2009 and 2010.
That $4bn in revenue for Q4 represents an 8 per cent increase from the third quarter, and a more modest increase of 4 per cent against the fourth quarter of 2007. The earnings were in line with Wall Street's estimates - at least until the restructuring charges kicked in.
"We are very pleased with our preliminary Q4 financial results," read a statement from Joe Tucci, EMC's president, chief executive officer, and chairman. "We were able to generate all-time record revenue and strong sequential revenue growth against the backdrop of a challenging global economy. Customers are telling us that information infrastructure and virtualization products and solutions are at or very near the top of their IT spending priorities. This, coupled with the technological advantage and quality of EMC's solutions and the strength of our sales and service organizations, helped us achieve our Q4 financial goals."
To get costs better in line with revenue expectations going forward, however, EMC said that it was restructuring its Information Infrastructure business and was quick to point out that its VMware subsidiary is not part of this business and is therefore not being restructured. EMC said that it will book a $248m restructuring charge in the fourth quarter of 2008 and then an additional $100m to $125m across the next two years as it consolidates back office operations, reduces management layers, cuts travel expenses, and reduces expenses on contractors and third-party services.
As part of the restructuring, EMC will cut some 2,400 employees - or about 7 per cent of its 34,300 workforce related to the Information Infrastructure business. The changes will save EMC approximately $350m in 2009 and about $500m in 2010. EMC has just under 38,000 employees worldwide, and its disk array and related software storage business is by far the largest piece of the EMC pie. ®