EMC sees 2Q miss

July 5, 2001 Posted: 2209 GMT

NEW YORK (CNNfn) -- EMC Corp. warned Thursday it expects second-quarter results to fall sharply below Wall Street forecasts, and cited the slowing economy for declining investment in information technology.

Hopkinton, Mass.-based EMC (EMC: Research, Estimates), the world's biggest data storage supplier, now anticipates reporting second quarter earnings of 4-to-6 cents a share on July 18, far short of analysts' consensus forecasts of 17 cents a share, according to earnings tracker First Call. The company also expects $2 billion in revenue, which is about $400 million short of Wall Street forecasts.

EMC shares tumbled $2.78 to $27.25 in after-hours trading Thursday after finishing the regular session down $1.59 at $30.03 ahead of the warning Thursday.

CEO Joe Tucci said each downturn of the economy is prompting its customers to spend less on information technology.

"The earnings results for EMC's major customers - the bulk of the S&P 500, for example - have been like a ball rolling down a hill for each of the past three quarters," Tucci said in a statement. "When our customers earn less money, most of them have less to spend on IT, and they take a longer time to spend what they do have. That means lowered revenue and profitability for EMC."

EMC's warning comes a little more than a month after the company unveiled plans to cut 1,100 jobs, or 4 percent of its workforce and that it would take a charge to cover the costs of the reductions.

Bill Teuber, the company's chief financial officer said Thursday that gross margins would fall in the mid 40 percent range for the second quarter because of the lower than anticipated sales volume, incentive programs and competitive pricing actions.

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