EMC's Very Profitable -- So Why the Layoffs?

 
 
By Chris Preimesberger  |  Posted 2010-01-25 Email Print this article Print
 
 
 
 
 
 
 

If data storage companies were dinosaurs, EMC would be Tyrannosaurus Rex. If they were all fish, EMC would be a shark.

Nothing wrong with being a T-Rex or a shark. They're just large and fearsome. As we know, these animals eat lots of other animals, because that's what they have to do to survive. They're so big and bulky that in order to maintain that bulk, they need to feed a lot -- and often -- to keep moving through the world.

EMC has long been known for this growth strategy: Buy and swallow other companies that will make the mothership healthy and profitable. EMC has digested more than 100 acquisitions in the last seven years.

Not too much wrong with that, either. In a free-market culture, the buying and selling of companies is an important part of our overall business picture. Adding good companies -- and continuing to execute correctly -- adds directly to the bottom-line profit of the acquiring company.

However, The Station does have an issue with EMC on another point: EMC also has been eating its own employees.

Why did it lay off 2,400 people in 2009 [this was confirmed for The Station by a trusted EMC source], when it is posting hugely positive numbers like it did Jan. 26: a quarterly profit of $426.5 million, up 54 percent from a year ago? Remember, this is profit, not income.

We repeat: Profit, not income.

In fact, EMC has posted profits in almost every quarter in the last eight years.

We are taught growing up that in a team situation, everybody on the team is responsible for the success or failure of the team. But we're not seeing a lot of failure here.

So for the longtime success of EMC, layoffs are the thanks 2,400 people get for helping a company make excellent money for its shareholders? Conservative management is one thing, but what is that all about?

EMC is a smart company, and we'd like to hear its side of this story. But companies generally don't like to talk about personnel issues.

However, there is no denying this: There were 2,400 people working for EMC who went home one evening last year and had to tell their families that they had been fired -- after helping their company produce record profits.

Can you explain it to those families, EMC?

 
 
 
 
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