EMC layoffs loom

As many as 1,250 jobs on the line as EMC consolidates operations

Even as EMC expands beyond network storage technology into security, virtualization and content management, it is preparing to cut as many as 1,250 jobs.

Tuesday the company reported third quarter net income of US$283.7 million, or 13 cents per diluted share, on revenue of US$2.82 billion for the three months ended Sept. 30, exceeding analysts estimates of 12 cents per share on revenue of US$2.67 billion.

The results matched the 13 cents a share earnings per diluted share in the third quarter of 2005 for the Hopkinton, Massachusetts-based firm, on revenue of US$2.37 billion. However, in the year earlier quarter EMC's net income was US$421.7 million.

EMC plans to eliminate 1,250 jobs as it consolidates operations in the wake of 21 acquisitions it has made in the last three years. EMC plans to take a pretax charges of US$150 million to US$175 million in the fourth quarter, or about 6 cents a share, to cover the cost of the consolidation.

"A lot of our employees are hearing this for the first time," said Joe Tucci, chief executive officer, president and chairman and of EMC on a conference call with analysts. He said EMC's staff has grown to 31, 000 from 17,500 three years ago before it began a series of acquisitions.

Work force reductions will be concentrated in middle management positions where there may be redundancy but will avoid research and development or "customer-facing" positions such as sales, he said.

EMC, which is known for making network storage equipment, has expanded into virtualization technology with its acquisition of VMWare Inc. and network security with its US$2.1 billion acquisition of RSA Security.

VMWare, which sells virtualization technology to improve the efficient operation of a data center, reported third quarter revenue of US$188.5 million, up 86 percent from the year-ago quarter.

EMC now bills itself as an information infrastructure company instead of a storage company, Tucci said, explaining that US$7 billion in acquisitions since 2003 have brought the company into the markets for information storage, protection, security, intelligent information management and other areas.

"I fundamentally believe that the company that combines information storage, information protection and information security together the best is going to be a huge winner and I know that company will be EMC," he said.

EMC forecasts fourth quarter earnings of 9 cents a share on revenue of US$3.16 billion.

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