EMC to realign workforce, sets record earnings for '05

EMC said Friday that it will "rebalance" its workforce by 1,000 employees this year, using the savings from layoffs to hire new workers for sales and marketing. At the same time, the storage vendor announced preliminary fourth-quarter and year-end results that beat its expectations and set a revenue record.

EMC projected that its fourth-quarter revenue will come in at about US$2.7 billion, with consolidated revenue for 2005 expected to be about US$9.6 billion. Both results beat the company's earlier expectations.

EMC CEO Joe Tucci said in a statement that the Hopkinton, Mass.-based company saw its 10th straight quarter of double-digit revenue growth "largely because our customers' enthusiasm for information life-cycle management has never been stronger."

But Brian Babineau, an analyst at Enterprise Strategy Group, said that "no one buys information life-cycle management." He said an uptick in product releases in 2005, including EMC's latest high-end Symmetrix array, and Dell Inc.'s continued success reselling EMC's midrange Clariion line of arrays is what boosted the company's revenue.

"And with that momentum ... software falls in behind," Babineau said. "On the software side, you're seeing Legato and Documentum becoming more complementary to each other in moving data between EMC's Symmetrix, Clariion, Centera and even the ADIC tape library that they acquired," he said.

EMC said that on Dec. 30, it approved a plan that would result in "increased focus on new product development and ... the company's ability to target, reach and support more customers around the globe."

EMC said that about 1,000 employees, or about 4 percent of its 25,200-person workforce, will be affected by layoffs -- leading to a fourth-quarter cash charge of approximately US$80 million to cover the cost of separation benefits. But ultimately, the company plans to hire more employees than it lays off in 2006, said EMC spokesman Michael Gallant.

Gallant said that the reductions are largely the result of integrating companies EMC has purchased this year, such as Captiva Software.

"We want to make sure we have the right skill sets aligned with our business priorities and growth objectives for this year," he said.

Babineau said EMC often waits a good length of time after acquiring a company so it can identify areas of job overlap before deciding on layoffs.

"When you start to do that, you want to make sure you don't have overlap in higher-salary jobs. I think a lot of those decisions weren't made by Tucci but by his upper management," Babineau said.

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