Storage Troubles: EMC Financial Loss, Veritas Loses CFO

EMC, the leading independent storage hardware vendor, warned that financial results for its third quarter would be gloomier than expected.

And Veritas Software, the leading independent storage software vendor, reported that its CFO left because he lied about his educational background.

EMC executives said the company expects to report revenue of $1.25 billion and a loss of 2 cents per share, compared with a loss of 1 cent per share in the prior quarter. These figures do not include special items. Analysts had been expecting a loss of 1 cent per share, according to First Call.

As a result, EMC plans to lay off an additional 7 percent of its workforce, or about 1,350 people, over the next couple of quarters, an EMC spokesperson said. The company's employee count, which peaked at 24,500 people in March 2001, is expected to be about 17,000 sometime during the first quarter of 2003, the spokesperson said.

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EMC will provide details of the cutbacks during its Oct. 17 earnings call, the spokesperson said. The company has historically kept its channel and distribution sales organizations intact, and indeed has even added people, he added.

EMC has been signing big deals, but due to cuts in spending and the threat of war with Iraq, customers are delaying those deals, the spokesperson added.

"The IT spending environment continues to be brutal," Joe Tucci, EMC's president and CEO, said in a statement. "In fact, it got even worse at the very end of the quarter. Our third quarter was on track until late September. The harsh reality of reduced budgets and the uncertainty of the economic and geopolitical climate are weighing heavily on business confidence, causing key projects and the corresponding IT spend to be delayed. We saw no significant change in the competitive environment during the quarter."

At Veritas, executives said that Kenneth Lonchar resigned as executive vice president and CFO after it was discovered that he had claimed to have received an MBA from Stanford University.

Gary Bloom, chairman, president, and CEO, said in a statement that Lonchar had made substantial contributions to Veritas. He also said that he reviewed the situation with its board of directors, the board's auditing committee and outside auditors. "While Ken's misstatement about his academic credentials is unfortunate, it has no bearing on the accuracy of our financial results or the quality of our financial procedures and controls," he said.

One Veritas solution provider, who asked to remain unnamed, said it is unbelievable that Veritas would not conduct due diligence in choosing a CFO. "I don't care what you say, [they did something pretty stupid," the solution provider said.