EMC plans layoffs in wake of weakened outlook
- 30 January, 2015 06:27
Storage giant, EMC, will soon start handing out pink slips as part of a new restructuring effort prompted by a weakened financial outlook.
Though it didn't specify how many staffers will be laid off, EMC said on Thursday that most of the job cuts will be made by the end of the first quarter, with the remainder completed by year's end.
"The company will place priority on shifting impacted individuals to faster-growing areas of the business," said company spokeswoman Katryn McGaughey. EMC still expects to end 2015 with more employees than it had at the beginning, she added.
The plan is expected to cost EMC between $130 million and $150 million.
EMC announced the restructuring along with its fourth-quarter and full-year 2014 financial results, which included record fourth-quarter revenue of $7 billion, up 5 percent year over year. Net income for the quarter grew 12 percent to $1.15 billion, or 56 cents a share.
For the 2014 year, EMC's revenue was $24.4 billion, an increase of 5 percent.
With fourth-quarter and full-year revenue each up 16 per cent, EMC's VMware business -- in which it has an 80 percent stake -- helped to buoy the company's financial results. Another key contributor was its Pivotal Software business, whose fourth-quarter revenue grew by 18 percent and full-year revenue jumped 27 percent.
Still, while EMC's fourth-quarter results were positive on the whole, its forecast for 2015 was less rosy. Citing the ongoing negative impact of currency fluctuations, the company predicted revenue of $26.1 billion and earnings of $1.98 earnings per share for the year.
The consensus estimate from analysts polled by Thomson Financial was for earnings of $2.13 a share on $26.21 billion in revenue.
Over the upcoming year, EMC will buy back $3 billion of its common stock, it said. It will also have to grapple with continuing pressure from activist investor Elliott Management, which has reportedly urged the company to spin off VMware and pursue other strategic opportunities.