EMC to cut 1,000 jobs, but company will grow in size

It may sound counterintuitive, but although storage giant EMC Corp. plans to cut 1,000 positions over the course of 2006, the storage giant expects to end the year with a larger total headcount. EMC plans to continue hiring staff to fuel its R&D (research and development) efforts and sales and marketing reach around the world as it cuts back on positions elsewhere in its operations, the company announced Friday.

The elimination of positions will occur across different unspecified parts of the company's global businesses during the coming year, according to an EMC spokesman. It's possible that some of the 1,000 affected staff will find other job opportunities within EMC, he said in a phone interview Friday. The company is using the term "rebalancing" to describe the layoffs.

EMC plans to comment more fully on the layoffs on Jan. 24 when it's due to release its fourth-quarter and full 2005 fiscal year financial results. Some of the layoffs will be due to normal attrition or the result of performance management issues, the spokesman said. Other factors include the identification of excess management layers, he added.

EMC's headcount at the end of its third quarter of 2005 was around 25,200, according to the spokesman, and the company has been actively hiring during the fourth quarter of 2005.

The company expects to take a fourth-quarter 2005 cash charge of around US$80 million to cover the cost of staff separation benefits, EMC said in a release issued Friday.

For the fourth quarter of fiscal 2005, EMC anticipates reporting total consolidated revenue of between US$2.70 billion and $2.71 billion, the company said in the release. The quarter is set to be EMC's tenth straight quarter of double-digit revenue growth, according to the release. Diluted earnings per share (EPS), excluding a number of items, should be at the high end of EMC's previous estimates at $0.17.

The excluded items include the $80 million workforce layoff charge and a $14 million in-process R&D charge related to EMC's December acquisition of document capture software vendor Captiva. Additionally, EMC completed the repatriation of $3 billion accumulated income it earned outside the U.S. resulting in a fourth-quarter 2005 income tax charge which will impact earnings by $175 million, according to the release.

The charges related to the layoffs, the purchase of Captiva and the income repatriation are expected to be in the order of $0.11 per diluted share. EMC estimates that fourth-quarter 2005 diluted EPS, on a GAAP (generally accepted accounting principles) basis, will be around $0.06.

Consolidated revenue for fiscal 2005 as a whole should be between $9.65 billion and $9.66 billion, according to the release.