After Another Poor Year, EMC Looks To FutureAfter Another Poor Year, EMC Looks To Future

EMC Corp. was glad to see 2002 end. Competition took market share; sales of its high-end flagship product stalled as customers waited for the upgrade coming in a couple of weeks; and the one-time storage juggernaut endured layoffs, job reassignments, and some management flight while trying to rely less on storage hardware and more on software and services. But the way Joe Tucci, EMC's president and CEO, and Bill Teuber, executive VP and CFO, talked about the just-ended year in their statements, 2002--including its last quarter--was "strong" and "encouraging."

EMC reported Thursday that revenue for 2002 was down 23% from 2001, a year that was down from the previous year. Revenue for 2002 was $5.4 billion, compared with $7.1 in 2001. However, the bottom line improved: EMC's net loss for the year was $119 million, or 5 cents per share, a 76% improvement over 2001's net loss of $508 million, or 23 cents per share.

Revenue for the fourth quarter ended Dec. 31 was $1.49 billion, about 1% less than $1.51 billion in the year-ago quarter. Special charges and restructuring related to activity such as layoffs forced charges in the most recent quarter that led to a net loss of $64 million, or 3 cents per share, around 9% less than the $70 million, or 3 cents per share, it lost last year.

Merrill Lynch financial analyst Steven Milunovich said in a report this week that the upgraded Symmetrix system, expected as soon as the first week of February, could lead to double-digit growth for EMC's flagship product. But he also says EMC's networked storage strategy, including the modular Clariion systems, is still key to the company's success and the chance for positive income in 2003 that Tucci predicts. "Another slant suggests that networked storage must grow about 30% to offset the decline in direct-attached storage," Milunovich said. "That scenario is reasonable but not a slam dunk."