EMC Q2 profit down 75%

BOSTON: EMC Corp. on Wednesday said second-quarter earnings fell 75 per cent,

meeting the range of its lowered estimates, as the No. 1 data-storage systems

maker cut prices to spur demand for devices that store information generated by

computer network traffic.

EMC executives warned that information technology spending may shrink on a

year-to-year basis - for the first time in decades - as EMC's customers weather

the current economic downturn.

Hopkinton, Massachusetts-based EMC said it earned $109 million, or 5 cents a

diluted share. That compared with a profit of $429 million, or 19 cents a

diluted share, in the year-ago period.

EMC on July 5 warned that earnings would fall between 4 cents and 6 cents a

share on revenue of about $2 billion. The lowered outlook, its second in four

months, triggered a sell-off that erased about $16 billion in shareholder value.

Total consolidated revenue at EMC dropped 6 per cent to $2.02 billion in the

second quarter, compared with $2.15 billion in the year-ago period.

"I cannot recall a more difficult environment in terms of technology

spending than the one that has unfolded over the past few months," EMC

executive chairman Mike Ruettgers said in a statement. "It is now expected

that IT spending may shrink on a year-to-year basis for the first time in

decades."

Shares of EMC closed Tuesday at $20.39. The stock is off 69 per cent this

year, underperforming the 8 per cent decline in the S&P 500 Index.

(C) Reuters Limited 2001.