EMC to shed staff by 2,000, fears Q3 loss

HOPKINTON, Mass.: Computer storage giant EMC Corp. said on Thursday it would

cut more than 2,000 jobs this year and probably report a third quarter loss as a

technology spending recession widened.

"The business world is simply covered in a blanket of hesitation,"

Joe Tucci, EMC's president and chief executive, said in a statement. "This

will likely be the first of many in the tech sector to warn," said Crowell

Weedon analyst James Ragan, who tied the news in part to last week's hijackings

which paralyzed much of the US economy.

Tucci's statement "suggests there are some deals that just aren't

closing," Ragan said. "Terrorist attacks have ground activity to a

halt over the past week." EMC said it would to cut its global workforce to

about 21,000 by year-end from 23,400 currently and take a charge of undetermined

size in the third quarter.

"At this point in time, it is highly unlikely that EMC will break even

in our fiscal third quarter. At our current expense run rate, breaking even

would require approximately $1.8 billion in revenue this quarter," Tucci

said.

Wall Street had expected the company to report per share results between a

loss of 3 cents and a profit of 4 cents, with a consensus projection of a 1-cent

profit, down from a 20-cent profit in the year-ago, September-ending quarter,

Thomson Financial/First Call reported.

Revenue at the once fast-growing firm had been seen falling to $1.8 billion

from $2.3 billion a year ago. "EMC's cost reduction efforts will be

sweeping in scope, encompassing our workforce, real estate, certain inventories,

and other areas," said Tucci.

EMC was one of the last major technology companies to feel the technology

spending slowdown, but it has steadily pulled back expectations, and analysts

say a fight for market share also is squeezing once-fat profit margins.

EMC executive chairman Mike Ruettgers blamed the economy for the firm's

problems. "There is a great and wide ripple effect happening throughout the

world that continues to lengthen this technology spending recession. Each

corporate layoff and spending curb tends to have a multiplier effect within the

economic food chain," he said.

EMC shares gained two cents on the New York Stock Exchange to close at $12.62

before the results warning.

(C) Reuters Limited 2001.