Plans to ‘thin the ranks’ at EMC

THE world’s biggest maker of data storage systems, EMC Corp, has said fourth-quarter profits fell 54% due to the costs of cutting 1,000 staff and of return company income from overseas.

EMC sales this year may top analysts’ estimates.

Net income declined to $148.3 million (€120.8m), or 6 cents per share, from $320.6m, or 13 cents, in 20004, the company said in a statement yesterday.

Sales, which climbed 15% to $2.71 billion, in the fourth quarter of 2005, are projected to rise by as much as 17% this year.

EMC Ireland employs 1,600 technical, operational, engineering and professional staff and its 560,000sq ft facility at Ovens in Cork.

Chief executive Joseph Tucci plans to cut management “bloat” and to beef up the company’s sales force.

In the past three years, EMC has added 9,000 workers, including more than 4,000 through acquisitions, to its workforce.

After replacing less-productive managers and workers, EMC will also be able to add to its product-development staff, Mr Tucci said.

“This is about getting some of the bloat out of middle-management and about getting some of the underachievers out of the company,’ he added.

“We have the opportunity to thin the ranks.”

The cost of firing 1,000 workers in the fourth quarter was about $80m, according to EMC.

Mr Tucci said the hiring of sales and research- and-development staff would begin immediately. He said EMC expects to end the year with more employees than it had at the end of 2005.

Shares of the company rose 21 cents to $13.47 at 10:16am in New York Stock Exchange composite trading.

The company also took a tax charge of $180m to repatriate about $3bn in foreign profit and $14m in costs related to its purchase of Captiva Software Corp.

Profit before the costs was 17 cents a share, in line with EMC’s preliminary earnings announcement on January 6 and with the average of 29 analysts’ estimates surveyed by Thomson Financial.

On the product side, Mr Tucci said the company will sell some new models in its high-end Symmetrix storage systems line, as well as some new software products.

Analysts surveyed by Thomson estimated earnings for the current quarter would be 14 cents a share.