EMC Comments On Third Quarter and Cost Reductions

Business Wire, Sept 20, 2001

Business/Technology Editors

HOPKINTON, Mass.--(BUSINESS WIRE)--Sept. 20, 2001

EMC Corporation today commented on its fiscal third quarter outlook and its plan to reduce operating expenses.

Joe Tucci, EMC's President and CEO, said, "EMC's position as the information storage market leader is extremely strong, but the current economic environment for technology expenditures is worsening globally. It is now clear that further weakening of the economy is causing major cutbacks in many of the industries served by EMC. The business world is simply covered in a blanket of hesitation. At this point in time, it is highly unlikely that EMC will break even in our fiscal third quarter. At our current expense run rate, breaking even would require approximately $1.8 billion in revenue this quarter."

Tucci said, "In response to this continuing economic deterioration, we are taking actions to reduce our overall operating costs. EMC's cost reduction efforts will be sweeping in scope, encompassing our workforce, real estate, certain inventories, and other areas." EMC expects to take a third-quarter charge in an amount still to be determined. EMC's worldwide workforce is expected to total approximately 21,000 by year-end, down from the current employee base of approximately 23,400.

"This reduction will be especially difficult, as the employees who will leave are highly qualified, dedicated people," said Tucci. "The information storage industry will continue to be a strong, long-term growth industry, and EMC will continue to lead it. The employees impacted by this reduction will be treated fairly, and when the global economy finally turns around and we are able to resume our growth, we sincerely hope to be able to welcome some of the people who leave back into EMC with open arms."

Mike Ruettgers, EMC Executive Chairman, said, "There is a great and wide ripple effect happening throughout the world that continues to lengthen this technology spending recession. Each corporate layoff and spending curb tends to have a multiplier effect within the economic food chain. At EMC, we've been working hard. We've been delivering powerful new technology and servicing our customers well. History tells us that the world's economy will rebound, and we know that the information storage market is among the strongest of any technology sector. We aim to stay lean and focused while continuing to work hard developing and delivering the world's best information storage technology and services."

About EMC

EMC Corporation is the world leader in information storage systems, software, networks and services, providing the information infrastructure for a connected world. Information about EMC's products and services can be found at www.EMC.com.

EMC is a registered trademark of EMC Corporation.

This release contains "forward-looking statements" as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) further adverse changes in economic conditions in various geographic markets and fluctuating currency exchange rates; (ii) an unexpected further decline in the revenue growth rate without a corresponding decline in costs; (iii) competitive factors, including but not limited to pricing pressures, in the computer storage and server markets; (iv) component quality and availability; (v) rapid technological and market change and the transition to new products; (vi) the relative and varying rates of product price and component cost declines; (vii) the ability to attract and retain highly qualified employees; (viii) the uneven pattern of quarterly sales; (ix) risks associated with strategic investments and acquisitions; (x) the Company's ability to execute on its plans; and (xi) other one-time events and other important factors disclosed previously and from time to time in EMC's filings with the U.S. Securities and Exchange Commission.