EMC Cuts Put 2,400 Out of Work
EMC, the Hopkinton, MA-based data storage company that is one of the state’s largest tech employers, said today in an after-hours announcement that is cutting 2,400 people from its worldwide workforce. That’s a 7 percent reduction, based on the company’s size as of September 30. Though it expects to book record revenues of $4 billion for the fourth quarter of 2008, EMC says it made the cuts to stave off the coming effects of the economic downturn.
The job losses will mainly affect EMC’s “information infrastructure” business, which doesn’t include Palo Alto, CA-based subsidiary VMware. The company will take a $248 million pre-tax restructuring charge, but it expects to save $350 million in 2009 and $500 million in 2010 as a result of the changes, which will reduce management layers and consolidate back-office functions and field and campus offices, according to the company’s announcement.
“We managed our costs and investments very carefully throughout 2008,” EMC CEO Joe Tucci said in a statement. “However, we believe this additional program will help us strike the right balance between achieving higher levels of efficiency and sustaining strong business agility and performance, without in any way compromising our ability to serve the needs of our customers over the long-term…Our goal is to position EMC for continued success throughout the downturn and for even greater success during the next economic growth cycle.”
EMC had predicted in October that its fourth-quarter revenues would be in the $4 billion neighborhood, and today’s announcement bore that out. That’s an 8 percent increase over the company’s third-quarter performance, and a 4 percent improvement over same quarter in the previous year. Tucci said corporate spending on information infrastructure and virtualization products remains strong.
Yet the company could not deny the need to trim costs to prepare for the falloff in corporate IT spending likely to hit this quarter—and continue through much of 2009—as the effects of the credit crisis ripple through the economy. In one stroke, the 2,400 layoffs at EMC increase the total number of technology-related layoffs tallied by Xconomy’s Boston Tech Layoff Tracker to 7,237, a 33 percent increase.