Press Release

EMC Reports Third Quarter Results

Hopkinton, Mass. - Thursday, October 17, 2002

Hopkinton, Mass., Thursday, October 17, 2002 - 

 

EMC Corporation (NYSE:EMC) today reported financial results for the third quarter of 2002, reflecting ongoing weakness in customers' spending on information technology, a strengthened balance sheet and continued progress in lowering its cost structure.

 

Revenue for the third quarter was $1.26 billion, an increase of 4% compared with the third quarter of 2001 and a decrease of 9% compared with the second quarter of 2002. Net loss for the third quarter was $51 million or $0.02 per diluted share, excluding a $68 million after-tax benefit associated with international tax matters and a $5 million after-tax benefit associated with a reversal to the third-quarter 2001 restructuring charge. This compares with a second-quarter 2002 net loss of $11 million or $0.01 per diluted share, which also excludes the $12 million after-tax benefit of a reversal to the third-quarter 2001 restructuring charge. Consolidated net income for the third quarter, including the benefit of the aforementioned items, was $21 million or $0.01 per share.

 

Joe Tucci, EMC's President and CEO, said, "The IT spending drought got even worse as the third quarter came to a close. Corporations are under-spending their existing budgets, striving to balance expenses in order to offset their own revenue shortfalls. As a result, we are taking further steps to align our costs with the realities of this painful economy. The environment is tough, but one thing has not changed a bit: EMC is the leader in a large and important marketplace, and we are continuing our unrelenting focus on our automated networked storage strategy. The benefits of our R&D investments are being brought to our customers every day. In the third quarter alone, we introduced 12 significant new products and services, as we continue to deliver the most aggressive rollout of new technology in EMC's history."

 

Bill Teuber, EMC's Executive Vice President and Chief Financial Officer, said, "Like most of our customers, we have made cost enemy #1. Strong expense controls across the board have helped us reach a quarterly cost savings of about $280 million over the last 12 months, bringing our quarterly break-even level down to about $1.4 billion from about $1.8 billion in the second quarter of 2001. I am also pleased with the overall strength of our balance sheet. Cash and investments now represent approximately 60 percent of total assets, bringing our total balance to nearly $5.8 billion."

 

Teuber continued, "We continue to do everything we can to control the controllable. As a result of the deterioration of the IT spending environment, we are extending our cost structure reductions. As we announced October 3, we will reduce our worldwide employee population by approximately 7%, or 1,350 people, to bring the total EMC workforce to about 17,000 employees, which will be 30% lower than the level it reached during the first half of 2001. We expect the majority of this reduction will be completed during the fourth quarter of 2002."

 

During the third quarter, EMC extended its leadership in automated networked storage with the delivery of new storage networking technologies, platforms, software, and services. EMC launched its next major wave of open software with the unveiling of the newest generation of its ControlCenter™ family; introduced a new, powerful family of CLARiiON platforms and integrated them with Celerra and Connectrix, the world's best-selling NAS and SAN access and connectivity solutions; expanded its services portfolio with the introduction of Information Solutions Consulting, which offers open, platform-independent storage consulting; and augmented its ability to deliver management tools to small and medium SAN environments with the acquisition of Prisa Networks. Also during the quarter, EMC deepened its executive bench with the addition of David Goulden, Executive Vice President of Global Marketing and Business Development, and Mark Lewis, Executive Vice President, New Ventures and Chief Technology Officer.

 

Despite the economy, industry leaders in the financial, government, healthcare, life sciences, retail, telecommunications, manufacturing, and transportation industries continue to look to EMC Automated Networked Storage to reduce costs through consolidation of storage and server resources, centralize and automate manual storage management tasks, and improve overall business continuity and flexibility. Among the many customers who turned to EMC to consolidate their heterogeneous environments into an integrated networked storage infrastructure during the third quarter were Agencia Tributaria (Spain), Blue Cross and Blue Shield of Massachusetts, Inc., Business Objects (France), Eastern Broadband Telecommunications (Taiwan), E-Plus Mobilfunk (Germany), First American Bank, Financial Times (UK), Kindred Healthcare, Inc., Norton Healthcare, Optimus-Novis (Portugal), Quantum Diagnostics Imaging, Quest Diagnostics Incorporated, Target Corporation, Union Pacific Corporation, U.S. Air Force, and Winn-Dixie Stores, Inc. AutoIS, EMC's open software strategy, also continued to gain momentum in the third quarter, with customer implementations at AT&T Wireless, Celera Genomics Group, CGI Group, Inc. (Canada), General Motors Corporation, JiangSu Mobile (China), Omgeo LLC, Orange Personal Communications Services UK Limited (UK), Radiolinja Aava Oy (Finland), Sixt AG (Germany), SMART Communications, Inc. (Philippines), Tower Semiconductor Ltd. (Israel), and Verizon Communications.

 

EMC also announced, on October 3, 2002, that a buyback of an additional 250 million shares was approved by its Board of Directors. This authorization is in addition to the 50 million share buyback authorized in May 2001.

 

About EMC

 

EMC Corporation is the world leader in information storage systems, software, networks and services, providing automated networked storage solutions that enable organizations of all sizes to better and more cost-effectively manage, protect and share their information. More information about EMC's products and services can be found at www.EMC.com.

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