NEW YORK (Dow Jones)Storage company EMC Corp. (EMC) will continue to price its products aggressively during the current slowdown, Executive Chairman Michael Reuttgers said Wednesday.
In the third quarter of last year, EMC said it would compete on price with select competitors, and Reuttgers said Wednesday the company continues to do so. The executive said that EMC's second quarter gross margin forecast won't change because of aggressive pricing. Company officials in April said they are confident the company can achieve revenue growth of 20% for 2001, and expect gross margins of between 53% and 56%.
Addressing investors at the Bear Stearns & Co. 12th annual technology conference here, Reuttgers said hardware is not the most expensive part of information storage and that it only accounts for about 15% of the money spent on storage. He said that software integration and personnel is where the costs are.
As for current market conditions, Reuttgers said a recovery in Europe is a quarter behind the U.S., and that Asia, based on anecdotal information, should have a good second half. The executive noted that EMC's fourth quarter should be strong across all its markets.
Reuttgers declined to comment on the current quarter, but did note that EMC isn't seeing a "dramatic" improvement in information technology spending. EMC continues to see IT managers holding off certain projects and other projects taking longer to be approved, he said.
EMC shares recently were up $1.39, or 4.4%, at $33.13 on volume of 5.9 million, compared with average daily volume of 20.5 million.
By Donna Fuscaldo, Dow Jones Newswires; 2019385253
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