EMC, the data storage maker facing pressure from activist shareholder Elliot Management, is cutting jobs in coming months. The announcement Thursday morning comes alongside 2015 profit projections that fell short of analyst expectations.
EMC, which employs roughly 60,000, declined to specify how many jobs it plans to cut. The company projects severance and other layoff costs of $130 million to $150 million, with the job cuts to be “substantially completed” by the end of this quarter.
EMC “expects to end 2015 with more employees than at the beginning,” the company said in a statement to SDxCentral, adding that the restructuring “will place priority on shifting impacted individuals to faster-growing areas of the business.”
Pointing to unfavorable foreign exchange rates, EMC projected adjusted profits of $1.98 per share for 2015, on revenue of $26.1 billion. Analysts had predicted $2.13 per share on revenue of $26.21 billion, according to Thompson Reuters.
Net income rose slightly for the quarter ended in December, to $1.1 billion, or 56 cents per share, from $1 billion, or 48 cents per share, in the same quarter year prior.
“We had a solid fourth quarter in a tough IT environment,” CFO Zane Rowe said, touting converged infrastructure — a hallmark of EMC subsidiary VCE — as a key growth opportunity.
But the company faces a new threat in Oracle, after chairman Larry Ellison this month turned what many expected to be a routine product announcement into a dramatic declaration of war for the converged infrastructure market.
“Converged infrastructure…is a market we pioneered and an area we expect to continue our lead,” Rowe said, seeming to allude to the new threat from Oracle.
Activist shareholder Elliot has pressured EMC to spin off majority-owned VMware, though the two sides reached a temporary détente earlier this month, when EMC added two outside board directors to appease the hedge fund.
“Elliot has been a good shareholder, and very constructive — we’ve had a lot of dialogue,” EMC Chairman and CEO Joe Tucci said on a call with investors Thursday.
EMC, which was founded in 1979, is one of several tech vendors to come under pressure from Elliot as the industry weathers a disruptive shift to software-defined solutions and new business models.
“We’re doing a lot better than almost all of the companies that were born in our era, so to speak,” Tucci said.
EMC stock was down less than 1 percent in morning trading on Thursday.