EMC shortage forces cut in profit forecast

EMC Corp, the world’s biggest maker of storage computers, cut its 2006 profit and revenue forecast after the company couldn’t produce enough machines to meet demand.

Profit will be about 51 cents a share, compared with the 57 cents anticipated on June 7, Hopkinton, Massachusetts-based EMC said in a statement. EMC reduced its sales estimate to about $10.8 billion (€8.5bn) from $11.1 billion on June 7.

EMC employs 1,500 people in Ballincollig, Co Cork, and 30 people in Dublin.

EMC ran short of its most powerful computers during the second quarter and earlier this week said sales and profit missed its forecast. Profit fell 4.9% in the period, in line with the preliminary figures released this week.

“Our execution was not up to our own high standards. We know what we need to do to sharpen our execution,” chief executive Joseph Tucci said in the statement. Shares of EMC fell 11 cents to $9.98 yesterday in New York Stock Exchange composite trading. They had fallen 27% this year before today.

Third-quarter profit will be about 12 cents a share this quarter on sales of at least $2.66 billion, EMC forecast yesterday.

That is less than AG Edwards & Sons Inc analyst Aaron Rakers’s estimate for sales of $2.64 billion.

EMC is trying to lift sales with the $2.1 billion purchase of RSA Security Inc. as growth cools and competition increases from rivals including Hewlett-Packard Co.

“H-P is going through a resurgence of some magnitude in terms of their product competitiveness, and I’m sure EMC is feeling some of that,’ said Matthew Kaufler, who helps manage $2.6 billion at Clover Capital in Rochester, New York.

Clover sold its approximately 600,000 EMC shares after the company said June 29 it would buy RSA.

“They have some explaining to do in terms of why this acquisition strategy is a smart one,” Mr Kaufler said in an interview.