Data storage giant EMC Corp. Wednesday reported a loss of almost US$1 billion in its third quarter, the company's first loss in almost a dozen years. EMC officials blamed the loss, at least in part, on the Sept. 11 terrorist attacks.
EMC Chairman Mike Ruettgers pointed to a continuing IT spending slowdown and the Hopkinton, Mass.-based company's Sept. 10 launch of a new line of its high-end Symmetrix Enterprise Storage systems and software as an untimely blow to revenue.
"The next day, the world changed. The focus of many of our customers and employees turned to assisting those affected by the tragedies, helping companies continue their information flows or simply navigating through an even slower pace of business," Ruettgers said in a statement.
Analysts said, however, that increased competition from vendors including Compaq Computer Corp., Hitachi Data Systems Corp. and IBM Corp. has also plagued EMC's bottom line.
EMC president and CEO Joe Tucci said layoffs and other cost-cutting measures announced in the second quarter achieved savings of about $58 million in operating expenses in the third quarter. EMC announced last month it would lay off 2,400 workers by the end of the year. Today, it said the number of layoffs would rise to 4,000.
Once those cutbacks are complete, EMC's workforce will have been reduced to 19,000 people.
"This is good progress, but it is not enough in the current environment. We expect that our expanded cost cutting will yield ongoing annual cost savings of about $800 million by the middle of next year," said Tucci.
EMC took $825 million in restructuring charges in the third quarter, reporting total revenue of $1.21 billion, 47 percent less than the $2.3 billion reported a year earlier.
Tucci said the Sept. 11 attack also highlighted the need for business continuance solutions in addition to "traditional disaster recovery capabilities and simple information protection measures."
"EMC's longtime leadership in providing the highest levels of business continuance has never been more relevant," he said.