EMC losses narrow due to cost cutting
The net loss for the fourth quarter narrowed to $63.9 million, or 3 cents a share, from $70.2 million, 12 months ago, EMC said in a statement. Sales fell to $1.49 billion from $1.51 billion. EMC employ 1,200 people in Ireland with most working at the company’s plant in Ovens, Co Cork.
Chief executive Joseph Tucci has let go thousands of workers, including 300 voluntary redundancies in Cork, and shut buildings to trim costs and boost gross profit margin, or the amount of sales left after production costs, as companies buy cheaper machines or cancel orders.
“They reduced their fixed costs, so the only way to improve beyond that is to sell more product, especially more software and services,” said Nitsan Hargil, a Friedman, Billings, Ramsey & Co analyst, who raised his rating on EMC shares this week to outperform from market perform and doesn’t own them.
Fourth-quarter gross margin widened to 39.5% from 36.9% a year earlier. It may expand to more than 40% by June, Tucci said on a conference call with investors and analysts today. Gross margin reached an 11-year low of 3.6% in the third quarter of 2001. It peaked at 59.2% in the fourth quarter of 2000.
Tucci has been trying to increase sales of software and services, which are more profitable for EMC than hardware. Software sales fell 1.7% to $346.6 million in the fourth quarter while services rose 14% to $309.5 million.
