EMC's Tucci: Slowdown could go beyond 2009
EMC Corp. chief executive Joseph Tucci, who runs the world's biggest maker of corporate data storage equipment, says the recession could extend into 2010 if investors' gloomy mood persisted.
"The environment is deteriorating as we sit here. Nothing I see out there, to be honest, makes me think it is going to improve," he said in an interview today with Reuters. "We're going to be in this for a while."
EMC is headquartered in Hopkinton.
The bulk of the problem is related to the sentiment of investors, businesses and consumers, whose decisions determine the direction of the economy, Tucci added.
"This is maybe 60 percent psychological and 40 percent real. Forty percent real is a lot to get through," he said.
"If people feel that there is a direction, that there is light at end of the tunnel ... an air of hope, rather than an an air of despair comes over the developed countries and the developing countries of the world, then we could well be on our way to recovery in (2009)," he said.
"Obviously if the leadership and the confidence does not come back, this could linger for a long time," he added.
He commented on the global economic outlook after his company forecast earnings for the current quarter at the low end of Wall Street expectations.
Tucci also predicted that global spending on information technology will climb 1 percent to 3 percent next year.
Tucci said that he likes the idea of using some of Hopkinton, Massachusetts-based EMC's $8.4 billion in cash and investments toward expanding purchases of its own stock.
EMC, which owns a majority stake in virtualization software maker VMware Inc, has used up $1.2 billion of the approximately $1.5 billion currently authorized for share repurchases during 2008.
He did not say when the board might vote to expand the buyback plan or how much money it might authorize him to spend.
He added that he is also looking to use some of EMC's cash on acquisitions, although no large or medium-sized deals are in the works.
"I think watching cards get played and continuing to investigate options with the board is the best course of action," he said.
Speculation back in August that his company was in talks to sell itself to networking equipment maker Cisco Systems Inc was unfounded, he added.
That chatter, which boosted EMC shares at the time, may have been prompted by meetings that officials from the two companies held to discuss product and marketing partnerships.
"As you do some of this partnering, you obviously have lots of meetings. People track who is meeting with who," he said.
He also said that he regularly talks to Cisco chief executive John Chambers, a friend who worked for Tucci in the 1980s when the two were employees at computer maker Wang Laboratories.
Tucci declined to say whether EMC and Cisco have ever held talks on a possible combination of the two giant technology companies, saying it is company policy to never discuss potential merger activity.
"Don't read into that one way or the other," he said. (Reuters)
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