EMC gross margins plunge to 30%. That's down from 47% the previous quarter, and 55% the quarter before that. Wow. I thought GM would go down, but not anywhere near that much. Last quarter, NTAP managed to keep their GM's flat with the previouos quarter, at 56%, in spite of price wars and declining revenues. If NTAP manages to keep their margins in the 50s, I'll be very impressed.
EMC had 1.2B in revenues this quarter. Current breakeven is at 1.7B/Q, and they are planning on getting breakeven down to 1.5B/Q (=6B/Y). So, they are assuming business is near the bottom now, and there will be a rebound by 3Q02. If that happens, they'll be ready for it. If it doesn't, then they lost their bet, and will have to downsize further.
Interestingly, they also said that pricing pressure was greatest in software and DAS, and least in NAS and SAN. That's good news for NTAP, and may explain why NTAP has managed to keep gross margins up, better than EMC. |
