warned it will likely lose money in the third quarter and will cut 2,400 jobs as wary customers continue to postpone large capital purchases.
"It is now clear that further weakening of the economy is causing major cutbacks in many of the industries served by EMC," EMC president and CEO Joe Tucci, said in a statement. "The business world is simply covered in a blanket of hesitation."
Tucci added that it is "highly unlikely" the company will reach the $1.8 billion in revenue needed to break even in the third quarter, given the company's current expenses.
The Hopkinton, Mass., company will take a number of steps to cut costs, chief among them layoffs. EMC's workforce will be reduced from 23,400 to 21,000 by year's end. Job cuts have been rumored for several weeks, both inside the company and on stock chat boards.https://o1.qnsr.com/log/p.gif?;n=203;c=204655439;s=10655;x=7936;f=201806121855330;u=j;z=TIMESTAMP;a=20400368;e=i "The employees impacted by this reduction will be treated fairly, and when the global economy finally turns around and we are able to resume our growth, we sincerely hope to be able to welcome some of the people who leave back," Tucci said.
It will also look at winnowing its vast real estate holdings and inventories. It is unclear how much of a charge EMC will have to take in the third quarter to pay for severance packages and write-downs.
The news came only hours after the company announced that it had bought Luminate, a Redwood City, Calif., maker of performance management software for $50 million in cash.
EMC routinely waits until late in the quarter to give financial updates since a disproportionate percentage of its business is closed in the last few weeks. But analysts said the terrorist attacks, which have paralyzed many sectors, likely convinced EMC it couldn't catch up.
"The fact that EMC has preannounced this early indicates to us the severity of the economic standstill," Goldman Sachs said in a note to investors. "In our view, even without the World Trade Center disaster, EMC would have missed the quarter."
Despite the dour news out EMC, GS believes there are still "more opportunities for upside than not," with its stock, although the company is operating in "uncharted territory."
If the economy picks up, EMC will likely benefit from a new focus on disaster recovery equipment, GS said.
Shares of EMC dove 1.32, or 10 percent, to 11.3 at midday, well off its 52-week high of 104.