EMC Will Cut Jobs as Quarterly Forecast Trails EstimatesGerrit De Vynck
EMC Corp., the world’s biggest maker of storage computers, forecast first-quarter profit that trailed analysts’ estimates as the company plans to take charges tied to the elimination of about 1,000 jobs.
Earnings per share excluding certain items will be 35 cents, the Hopkinton, Massachusetts-based company said today in a regulatory filing. That compared with an average analyst estimate of 43 cents, according to data compiled by Bloomberg.
The jobs cuts will result in charges of $100 million to $120 million, including cash payments of $95 million to $114 million and will be substantially completed by the end of this quarter, the company said. Even so, EMC intends to end 2014 with the same number of employees, or slightly more, compared with the start of the year, it said in a separate statement.
EMC has been seeking new ways to profit from the storage market as companies slow purchases, especially of more expensive products. Demand for EMC’s software and cloud-computing services, which store information and programs on remote servers for access via the Internet, is helping to make up for weaker server sales, Abhey Lamba, an analyst at Mizuho Securities USA Inc. who recommends buying the shares, said in a Jan. 20 note to clients.
EMC fell 2.9 percent to $24.65 at the close in New York. The stock declined 0.6 percent last year.
Fourth-quarter sales rose 11 percent to $6.68 billion from $6.03 billion a year earlier, EMC said today. That compared with the $6.63 billion average estimate of analysts. Profit in the quarter before certain items was 60 cents a share, beating the average 59-cent estimate.
While the company didn’t say in the filing how many jobs will be eliminated, Lesley Ogrodnick, an EMC spokeswoman, said in an e-mail that reductions will be similar in number to the last round. In the first quarter of 2013, the company put a plan in place to cut 1,004 positions.