UPDATE 2-EMC says to cut 2,400 jobs, shares rise

Thu Jan 8, 2009 12:21am GMT

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*EMC to cut 2,400 jobs, or 6 percent of its staff

*4th quarter earnings in line with estimates

*Excludes Q4 restructuring charge of 10 cents a share

*Shares rise 5 pct in extended trading (Adds analyst comments, details on results. Updates shares)

By Jim Finkle

BOSTON, Jan 7 (Reuters) - EMC Corp (EMC.N), the world's biggest maker of data storage equipment for businesses, said it plans to cut 2,400 jobs, or 6 percent of its staff, to help weather the global recession, and its shares rose 5 percent.

The Hopkinton, Massachusetts-based company also reported a preliminary fourth quarter profit, excluding a restructuring charge, which was in line with Wall Street Estimates.

EMC shares rose as investors cheered news that EMC was moving to control costs and that it had met expectations for the quarter, particularly after No. 1 chipmaker Intel Corp (INTC.O) had warned earlier on Wednesday that its earnings fell short of already diminished estimates.

"It's amazing news," said Kaushik Roy, an analyst with Pacific Growth Equities. "They've done so much better compared to other tech companies... EMC has delivered on its promises."

Jefferies & Co analyst Bill Choi said that he expects other technology companies to add to the growing list of ones that have announced restructuring plans.

"I think everyone is just going to have to restructure their business to right-size for this current environment... We are in a recession," Choi said.

Technology companies that have recently announced layoffs include AT&T Inc (T.N), Motorola Corp MOT.N, Sony Corp (6758.T) and Sun Microsystems JAVA.O.

NO FORECAST

EMC said it expects to report fourth quarter earnings, excluding a restructuring charge of 10 cents a share, of 23 to 24 cents a share. That would be in line with the 23 cent average forecast of analysts polled by Reuters Estimates.

It said that it recorded about $4 billion in revenue during the quarter, which also was in line with Wall Street expectations.

The company, which will release full results on Jan 27, did not issue earnings forecasts for the current year.

"Our goal is to position EMC for continued success throughout the downturn and for even greater success during the next economic growth cycle," Chief Executive Joseph Tucci said in a statement.

The cost cuts will reduce annual spending by about $350 million in 2009 over 2008, the company said. That savings will increase to about $500 million in 2010.

EMC shares rose to $11.78 in after-market trade, from their New York Stock Exchange close of $11.18.

The technology giant -- whose rivals include NetApp Inc (NTAP.O), IBM (IBM.N), Sun Microsystems and Hewlett-Packard Co (HPQ.N) -- said that the layoffs would result in about $237 million in costs through the third quarter of 2010.

The company said it expects to incur additional restructuring related costs of $76 million to $101 million by the end of 2010. (Additional reporting by Ritsuko Ando; editing by Carol Bishopric)

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