EMC to Cut Jobs as Dell Acquisition Looms
EMC will cut jobs ahead of its expected acquisition by Dell later this year.
In a filing with the Securities and Exchange Commission (SEC) on Dec. 31, EMC officials wrote that executives with the giant storage technology vendor the day before had approved a restructuring plan that is aimed at reducing expenses by $850 million annually. The plan calls for an unspecified number of jobs to be cut, with most of those layoffs occurring by end of the first quarter. The remaining job cuts will be completed by the end of the year, according to the SEC filing.
EMC officials expect to take a total charge of $250 million in connection with the restructuring effort.
A spokesman for EMC would not say how many jobs would be cut, but told The Wall Street Journal that most of the cost savings would come from places other than workforce reductions, including "process redesign and digitization and portfolio simplification."
The company currently has about 70,000 employees worldwide and had $24.4 billion in revenue in 2014.
Dell executives in October 2015 announced a $67 billion bid to buy EMC, a move that they expect will bolster the company's efforts to become a top-tier enterprise IT solutions and services provider that can better compete with the likes of Hewlett Packard Enterprise, IBM and Cisco Systems. The move also will include the companies that make up EMC's federated business model, including VMware, VCE, RSA and Pivotal.
Both Dell and EMC are looking to make moves to ease the integration and debt burdens that will result from the deal, which is the largest by far in the tech industry. EMC and VMware soon after the Dell deal was announced said they planned to spin out cloud software maker Virtustream and create a joint venture. However, they abandoned the plan in December after shareholders expressed worry that the idea would further hurt VMware's stock.
Dell officials reportedly are looking to reduce its debt burden once the deal closes this year by selling off some assets, including its Quest software and SonicWall network security units, as well as the services business that is based on its Dell's acquisition of Perot Systems in 2009 for $3.9 billion. According to recent reports, there are several companies interested in buying the services business.