EMC hits record revenue but profit falls sharply

EMC is laying off 2,400 staff

Storage giant EMC has reported record quarterly revenue of $4.02bn (£2.85bn) – but profit fell substantially just weeks after announcing plans to cut 2,400 jobs.

Net income for the three months to 31 December 2008 was $288m (£204m), down from $525.7m (£373.2m) in the same period in the previous year, despite a five per cent year-on-year increase in fourth quarter sales.

The company is being understandably cautious about prospects for 2009. EMC said it expects global IT spending to “decline as a percentage in the mid-to-high single digits compared with 2008” and that “a higher than usual percentage of the full-year IT spending will take place in the second half of the year.” But the firm predicted it will perform “slightly better” than the overall market.

“EMC has a firm grasp on what’s required to thrive in tough times and emerge even stronger in the next growth cycle,” said chief executive Joe Tucci.

But “what’s required” is likely to include further cutbacks, according to EMC chief financial officer David Goulden.

“Through 2009 we will continue to streamline operations, reduce costs and strengthen the efficiencies of our global operations,” he said.

Full-year revenue for 2008 was $14.9bn (£10.6bn), up 12 per cent year on year, while annual net income fell from $1.67bn (£1.19bn) in 2007 to $1.35bn (£959m).

The previously announced layoffs – equivalent to seven per cent of EMC’s workforce - will contribute to overall savings from the firm’s restructuring programme that are expected to reduce the 2008 cost base by $350m.

Like several other IT suppliers, EMC also declined to make any predictions on future revenue or profit in the current economic climate.

EMC subsidiary VMware reported $515m (£366m) revenue, up from $412m (£293m) last year and beating analyst estimates.

The firm's fourth-quarter net income reached $111m (£78m), or 29 cents per share, up from $78m (£55m), or 19 cents a share, in the same period in 2007.