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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (35873)	9/20/2001 9:49:48 PM
From: Teri Garner	Read Replies (1) \| Respond to of 37746

EMC cutting more than 2,000 jobs, sees Q3 loss (UPDATE: adds details, analyst comment, byline, previous HOPKINTON) By Peter Henderson SAN FRANCISCO, Sept 20 (Reuters) - Computer storage giant EMC Corp. (NYSE:EMC - news) announced on Thursday it would cut 10 percent of its work force, more than 2,000 jobs, and probably report a third quarter loss, blaming a widening recession and slowing technology spending. ``The business world is simply covered in a blanket of hesitation,'' Joe Tucci, EMC's president and chief executive, said in a statement by the technology bellwether. ``This will likely be the first of many in the tech sector to warn,'' said Crowell Weedon analyst James Ragan, who tied the news in part to last week's devastating air attacks which paralyzed much of the U.S. economy. ``Terrorist attacks have ground activity to a halt over the past week,'' Ragan said. Michael Gallant, spokesman for Hopkinton, Massachusetts-based EMC, told Reuters that the economy had not been improving before the attack, which destroyed New York City's World Trade Center and damaged the Pentagon outside Washington, D.C. ``During the quarter the economy showed no improvement,'' he said. The economy has caused our ability to forecast to be quite cloudy." EMC said it would to cut its global workforce to about 21,000 by year-end from 23,400 currently and take a charge of undetermined size in the third quarter. ``At this point in time, it is highly unlikely that EMC will break even in our fiscal third quarter. At our current expense run rate, breaking even would require approximately $1.8 billion in revenue this quarter,'' Tucci said. ``The current economic environment for technology expenditures is worsening globally.'' Wall Street had expected the company to report per share results between a loss of 3 cents and a profit of 4 cents, with a consensus projection of a 1-cent profit, down from a 20-cent profit in the year-ago, September-ending quarter, Thomson Financial/First Call reported. Revenue at the once fast-growing firm had been seen falling to $1.8 billion from $2.3 billion a year ago. ``EMC's cost reduction efforts will be sweeping in scope, encompassing our workforce, real estate, certain inventories, and other areas,'' said Tucci. EMC was one of the last major technology companies to feel the technology spending slowdown, but it has steadily pulled back expectations, and analysts say a fight for market share also is squeezing once-fat profit margins. Robertson Stephens analyst Dane Lewis said EMC's competitors were closing the technology gap but that the Thursday warning was a reflection of wider economic problems. ``It is just really difficult for technology companies to sell product,'' he said. ``I'd say the question is how bad is it?'' he asked. ``Is there an uptick in Q4? And I think a lot of people are getting signals that that is not the case.'' HIJACKING AT WORST TIME EMC Executive Chairman Mike Ruettgers said the economy was gripped by a worsening cycle. ``There is a great and wide ripple effect happening throughout the world that continues to lengthen this technology spending recession. Each corporate layoff and spending curb tends to have a multiplier effect within the economic food chain,'' he said. EMC declined to comment on the effect of the September 11 hijackings, except to say that they came in the middle of the quarter's last month, when it closes a significant number of deals. That is true for many technology firms, Lewis said. The destruction in Manhattan has also prompted expectations of new demand for companies that want to protect data with disaster recovery systems, such as ones on offer from EMC. ``Disaster recovery and how to protect your data is certainly top of mind among customers,'' Gallant said, but he declined to comment further. EMC shares gained 2 cents on the New York Stock Exchange to close at $12.62 before the results warning. biz.yahoo.com