EMC to cut 1,250 jobs in wake of acquisition binge
Company posts record revenues for 3d quarter
Massachusetts' top digital technology company, EMC Corp. of Hopkinton, plans to cut 1,250 jobs worldwide, even as it posted record-high third quarter revenues.
EMC vice chairman William Teuber said the layoffs will help the company obtain maximum benefit from its aggressive acquisition strategy. EMC has bought 21 companies over the past three years . Teuber said that cutting jobs is ``never a pleasant thing to do, never a fun thing to do," but buying so many companies has inevitably led to a host of redundant positions.
Teuber said the company hasn't finalized its layoff plans, and so he didn't know how many of the job cuts would occur in Massachusetts, home to 8,700 EMC employees. The company expects to set aside $150 million to $175 million from fourth-quarter earnings to pay for the restructuring.
This is the second announced layoff at EMC this year. In January, the company said it would let go of 1,000 workers worldwide. But the layoffs haven't interrupted a growth spurt at the company, which is benefiting from strong global demand for data storage hardware and software. New hires and acquisitions of companies like RSA Security Inc. of Bedford have pushed EMC's worldwide headcount from 25,000 in January to almost 31,000 today, and spokesman Greg Eden said the company will continue to expand.
Steve Duplessie, senior analyst for Enterprise Strategy Group Inc. in Milford, said that EMC's job cuts are an inevitable part of its acquisition strategy, as well as the company's need to remain agile even as it grows rapidly. ``I feel sorry for the 1,200," Duplessie said, ``but it's the inevitable course of Darwinism in business."
Meanwhile, EMC's third-quarter results suggest that the company has succeeded in solving the inventory problems that led to disappointing sales in the second quarter. Revenue for the three months ended in September were $2.82 billion, the best quarterly performance ever, and up 19 percent from the same period in 2005. EMC earnings came in at 13 cents per share, down from 17 cents in 2005. But last year's result was boosted by an extra 4 cents a share in tax benefits. In addition, EMC this year began deducting the value of stock options from earnings. If the practice had been followed last year, third-quarter profits would have been 3 cents a share lower. EMC said that when these factors are taken into account, earnings for the quarter actually rose 30 percent from 2005.
Teuber said that EMC was able to meet strong demand for its newest Symmetrix DMX-3 storage arrays, used by the largest corporate and government customers. The company's failure to produce enough of these arrays led to a sizable shortfall in sales during the second quarter. ``They just couldn't get enough stuff out the door" in the previous quarter, said Duplessie. ``These guys don't make the same mistake twice."
Hiawatha Bray can be reached at bray@globe.com. 