EMC losses soar as revenues cut in half

18 April 2002 Storage hardware giant EMC has announced a loss of just under $100 million (€113 million) in its fiscal first quarter on revenues down by almost half. The company blamed its poor results on weak corporate IT spending across the board.

The Hopkinton, Massachusetts-based company reported revenues down 44% to $1.3 billion (€1.46 billion), compared to $2.34 billion (€2.63 billion) posted in the same period a year earlier.

Net losses amounted to $96.5 million (€108.5 million), before the reversal of an earlier restructuring charge was factored in, which brought the headline net loss down to $76.9 million (€86.5 million). That compared to a net profit of $398.8 million (€448.7 million) in the same period a year earlier.

EMC has indicated that it expects IT spending to be flat at best during 2002. Most customers remain cautious and the market is dogged by excess capacity, it said. Furthermore, the ongoing price war among vendors has also dragged down prices and revenues.

That competition is set to intensify following a deal signed on 16 April between systems giant IBM and Japan’s Hitachi, both of which have taken significant chunks of market share from EMC in the high-end storage market in recent years.

Under the terms of the deal, the two companies have pledged to jointly develop open data-storage software and hardware. The idea is to enable different devices from different vendors running on the same network to be able to interoperate more easily.

As the market leader and with a more proprietary strategy EMC would have the most to lose from any shift to open systems in the storage market.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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