10 March 2010
Wednesday
EMC execs says IT spend to drop a lot in 2009
By Beth Pariseau, Senior News Writer | Jan 30, 2009
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PrintAfter giving a "respectable" fourth quarter and full-year earnings report Tuesday morning, EMC Corp. CEO Joe Tucci says he expects the global economic crisis to get significantly worse before it gets better.
Tucci and CFO David Goulden say EMC expects global IT spending to decline between 4% and 9% this year, with the most dramatic slowdown to come between the end of 2008 and the current quarter. Tucci says EMC came in just shy of its earnings forecasts for the fourth quarter and full year thanks to a "mini-budget flush" in the fourth quarter.
EMC reports revenue of $4.02 billion for the fourth quarter of 2008, up 8% vs. the third quarter and up 5% compared to the fourth quarter of 2007. Full-year revenue of $14.88 billion for 2008 missed EMC's forecast by approximately $100 million.
Tucci says the drop-off in the first quarter of this year will be steeper than usual, and the company doesn't expect much of a recovery before the second half of the year. Neither he nor Goulden gave specific growth outlook numbers or revenue guidance.
Tucci says conversations with EMC's customers indicate that companies are "focused on driving their own restructuring…driving complexity and cost out of their environments…and demanding quicker ROIs." By the second half of the year, Tucci says he expects that at least some customers will have "gotten restructuring behind them and come to grips" with the economy, and begin spending again.
This outlook is considered optimistic by storage analysts. "I hope he's right," says John Webster, principal analyst at Nashua, N.H.-based Illuminata Inc., who wonders if companies will turn to free open-source tools in lieu of proprietary products. "IT is stressed and under pressure. Commercial IT has watched from the sidelines, but I wonder if, in a down economy, a CIO might not look over the fence at open source."
