EMC reports $77m first-quarter loss

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EMC reports $77m first-quarter loss

Data storage company EMC has reported a $77m (£53m) first-quarter loss on revenue that totalled $1bn less than for the same quarter a year ago.

The company yesterday reported $1.3bn (£0.9bn) in revenue for the quarter ended 31 March. That compares to $1.5bn for the previous quarter and $2.3bn for the year-earlier period. The company, however, is still predicting a return to profitability by the second half of 2002.

Chief executive officer Joe Tucci said the first-quarter loss reflects a drought in new application deployments among customers who are "suppressing demand for major new IT projects". He also said the company has made progress in "across-the-board" operational improvements through diligent cost cutting, which is ahead of schedule. The company has laid off more than 6,000 people in the past year.

Tony Prigmore, an analyst at Enterprise Storage Group, said EMC's results were disappointing, but mainly because software growth as a percentage of business declined.

"Their software business in Q4 was 29% of [the business]. It appears to be about 27% in Q1," he said. "I think the takeaway from that is not necessarily a slam on EMC's results; I think it says that no one's escaping from this economy."

Tucci said the company's latest software offering, its so-called AutoIS suite, saw a four-fold increase in new licences compared with the last quarter, "representing the most rapid adoption of new software in EMC's history". AutoIS is open management software that provides storage administrators with a single console to view their network and storage resources. EMC said it has sold more than 1,000 AutoIS licences since its October introduction,

But Prigmore said the majority of those licences include EMC's mainstay ControlCenter management application.

"The two more recent [software applications] clearly cannot be meaningful revenue-wise. The good news is they've continued to sell a lot of the ECC software, which was a core product before the AutoIS initiative," he said.

Bill Teuber, EMC's chief financial officer, also cited as a plus the company being a quarter ahead of schedule in cost-cutting initiatives, which had reduced quarterly "break-even" budget levels by more than $200m (£138m) over the last nine months.

"This progress contributed to an increase during the first quarter of more than $200m in cash and investments, bringing our total cash and investments to approximately $5.3bn (£3.7bn)," Teuber said.

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