EMC employees brace for more layoffs as the company vows to cut $850 million in expenses


EMC will be eliminating jobs again as it seeks to cut $US850 million worth of annual costs from its books by the end of next year, it told Wall Street analysts on its second-quarter earnings call on Wednesday.

In the fourth quarter, the company plans to start its expense-cutting program by snipping $US50 million. That will include trimming its headcount by a not-yet-announced number of people, CFO Zane Rowe said:

We will begin to see the impact of the program in the fourth quarter of this year with a reduction in our existing cost base of $US50 million … We will provide you with the information on the related charge and headcount reductions when finalised, and additional details of the program as we roll it out over the upcoming year.

The company laid off 1,500 workers in its first quarter of this year (reportedly in January) from the EMC Information Infrastructure unit, CEO Joe Tucci revealed to analysts in April.

And this is on top of cutting about 1,000 people in 2014, while hiring in up-and-coming areas.

The changes, while painful for employees, could ultimately be good for the company which, insiders say, suffers from a lot internal bureaucracy.

As one employee wrote on Glassdoor the day before the new cost-reduction plan was announced:

Pros: Good work life balance, excellent opportunities to learn, opportunities in many divisions and locations to transfer and grow.

Cons: Too frequent resource re-balancing, many in organisation for very long time and resistant to change, silos and duplication of work. No yearly raise.

EMC is struggling to shed costs from its dwindling old-school technology units while it invests in growing areas.

Demand is shifting away from EMC’s costliest computer storage systems towards new technologies like cloud storage from Amazon, Google, Microsoft; big-data systems like Hadoop that use low-cost commodity storage; and flash-based storage, where EMC competes against a crop of upstarts like Pure Storage, as well as traditional foes like IBM and HP, both of whom are going through their own rough transitions right now.

As far the second quarter goes, EMC reported earnings per share, excluding certain items, of 43 cents, a beat, (analysts were expecting 41 cents), and $US6.1 billion in revenue, which was in-line with expectations.

Although the company lowered revenue expectations for its full year by $US400 million (it now expects $US25.3 billion in revenue and non-GAAP EPS to be $US1.87 ), shares are up.

Investors had expected worse, with the stock suffering from a rash of downgrades since January. And they like the cost-cutting plan.

We reached out to EMC for further comment and will update when we hear back.

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