HOPKINTON, Mass. - January 07, 2009 -
EMC Corporation (NYSE: EMC), the world leader in information infrastructure solutions, today announced that it expects fourth-quarter 2008 revenues of approximately $4 billion, representing an EMC record for quarterly revenue, approximately 8% revenue growth compared with the third quarter of 2008, and 4% growth over the same period a year ago. EMC also announced that it expects in the fourth quarter:
- GAAP earnings per diluted share of $0.13 to $0.14, including the impact of a $0.10 restructuring charge, described below.
- Excluding the restructuring charge, non-GAAP earnings per diluted share of $0.23 to $0.24.
- Excluding the restructuring charge, stock-based compensation and intangible asset amortization, non-GAAP earnings per diluted share of $0.30 to $0.311.
These preliminary revenue and EPS results, excluding the effect of the charge, are in line with estimates the company provided on October 22, 2008.
"We are very pleased with our preliminary Q4 financial results," said Joe Tucci, EMC Chairman, President and CEO. "We were able to generate all-time record revenue and strong sequential revenue growth against the backdrop of a challenging global economy. Customers are telling us that information infrastructure and virtualization products and solutions are at or very near the top of their IT spending priorities. This, coupled with the technological advantage and quality of EMC's solutions and the strength of our sales and service organizations, helped us achieve our Q4 financial goals."
To improve the competitiveness and efficiency of its global business, EMC also announced a restructuring program to further streamline the costs related to its Information Infrastructure business, which does not include VMware. EMC expects the program to reduce costs from its 2008 annualized rate by approximately $350 million in 2009, increasing to approximately $500 million in 2010. The program's focus is to consolidate back office functions, field and campus offices; rebalance investments towards higher-growth products and markets; reduce management layers; and further reduce indirect spend on contractors, third-party services and travel. The restructuring program will reduce EMC's global Information Infrastructure workforce by approximately 2,400 positions, or about 7% of its headcount as of September 30, 2008.
"We managed our costs and investments very carefully throughout 2008," Tucci continued. "However, we believe this additional program will help us strike the right balance between achieving higher levels of efficiency and sustaining strong business agility and performance, without in any way compromising our ability to serve the needs of our customers over the long-term. We are very confident in the competitiveness of our products, services and solutions and the skill and determination of our workforce. Our goal is to position EMC for continued success throughout the downturn and for even greater success during the next economic growth cycle."
As a result of the program, EMC will book a pre-tax restructuring charge of $248 million in the fourth quarter of 2008. After taxes, this charge is $200 million, or $0.10 per diluted share. EMC expects to record additional pre-tax restructuring charges of $100 million to $125 million across 2009 and 2010.
The program's expected savings will come from both cost reductions and the transformation of several areas of EMC's operational cost structure. As part of the program, EMC is undertaking several initiatives to transform the structural efficiency of how it operates worldwide. These initiatives will include the consolidation and movement of various facilities and processes beginning in 2009 and to be completed by the end of 2010. As part of these transformation efforts, the company expects to incur additional non-recurring, pre-tax transition costs of approximately $75 million to $100 million over this period; these investments are necessary to ramp up the new, more efficient capabilities ahead of switching over from the existing cost structure. EMC will break out these transition expenses in its financial results as they are incurred during the phase-in period.
Further details will be provided during EMC's fourth-quarter earnings call scheduled for January 27, 2009.
1 A restructuring charge of $0.10 per diluted share, stock-based compensation of $0.05 per diluted share and intangible asset amortization of $0.02 per diluted share are excluded from the non-GAAP earnings per diluted share of $0.30 to $0.31.
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