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EMC Reports Mixed Results, Weak Guidance, Plans Layoffs

No word yet on how many jobs will go.

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EMC shares opened higher by nearly 1 percent this morning after the data storage hardware company reported fourth-quarter sales that were below expectations. It said it anticipates weaker sales in 2015.

The company also said it will lay off an unspecified number of employees this quarter and will record restructuring charges in the range of $130 million to $150 million.

The company said it expects revenue of $26.1 billion for 2015, below the consensus view of $26.2 billion, and earnings of $1.98 per share, well below the consensus of $2.13.

EMC posted earnings per share of 69 cents, up 15 percent from the year-ago quarter on revenue of $7 billion, up 5 percent year on year. The results compare with the expectations of analysts who called for EMC to earn 68 cents per share on revenue of $7.1 billion. Revenue for the full year was $24.4 billion, up 5 percent, and per-share earnings were $1.90, up 6 percent.

Hopkinton, Mass.-based EMC said in a regulatory filing that its approved restructuring plan includes layoffs that will be mostly completed by March, the end of the first quarter of its 2015 fiscal year. It did not say in the filing how many employees will be fired. The company shed no new light on its plans for job cuts during a conference call with analysts.

An EMC spokesman in an emailed statement said the restructuring is “intended to enable EMC to rebalance and reorganize our workforce to best align with the opportunities ahead” and that it will “place priority on shifting impacted individuals to faster-growing areas of the business and expects to end 2015 with more employees than at the beginning.”

EMC shares rose by 24 cents, or nearly 1 percent, to $26.84 during the first half hour of trading on the New York Stock Exchange. On Wednesday, the shares closed at $26.60, down nearly 3 percent from Tuesday’s close.

Earlier this month, EMC reached a standstill agreement with Elliott Management, an investment firm controlled by billionaire Paul Singer that controls about 2 percent of the company’s shares and has pressed it to divest itself of its controlling interest in the software company VMware. EMC agreed to add two directors to its board, both of whom Elliott approved of.

The company offered no hints at any pending change to its unusual corporate structure, another change for which Elliott has been agitating. Roughly 80 percent of EMC’s market valuation is the result of its majority stake in VMware. And CEO Joe Tucci, asked if any changes might be coming, said the company will not be talking about it at an investor event next month. “We will not be talking about our structure,” he said. “We will be talking about how we think we can win.”

Also during the conference call, Tucci dodged a question about his plans to retire. His current contract expires in February, but he has said in the past, and reiterated today, that the retirement date in February isn’t firm. “I’ve said that February was to be a guidepost, it could be a couple of months earlier or a couple of months or quarters later,” he said. “I don’t want to put up another date with another contract. I’m serving at the will of the board and the will of the employees and of the shareholders.”

Updated with additional information and quotes from the conference call.

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