EMC’s tough opportunity

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Data storage is in a “sea change,” EMC Corp. CEO Joseph Tucci said in his company's webcast July 22, the day the Hopkinton-based company announced mixed second-quarter financial results.

At the center of that sea change is “the cloud” — a deceptively simple term for technological advances and strategies that have roiled the data storage industry, stirring competition and testing corporate resourcefulness.

Although EMC, Central Massachusetts' second-largest employer, lowered its outlook for the rest of the year, it offered assurances that it's aggressively shoring up for the future amid technological upheaval. When going through this kind of a “huge” sea change, Tucci said in answer to a question during the webcast, “business as usual is … rarely a good strategy.”

What is EMC’s strategy?

EMC built its empire largely through on-premises computer data storage. Now, customers are at varying stages of transitioning to off-premise models. EMC has had to devise ways to embrace the cloud and related emerging technologies, while retaining the core competencies that have served it well. It has done that largely through a multi-pronged approach, nurturing initiatives (Tucci singled out XtremIO, ViPR-ECS-ScaleIO, NSX, AirWatch, Pivotal and DSSSB) that offer new products and address different aspects of traditional and transitional data storage.

And what about VMware?

As part of its “federation” strategy, Tucci also strongly affirmed his stance that VMware is an important arm of EMC, saying the two are “better together.” EMC has faced pressure from activist shareholder Elliott Management Corp. to spin off the California-based subsidiary, which makes virtualization software.

What did the Q2 results say, and signal?

The widespread transition from on-premises to cloud-based storage has impacted EMC's financials.

While the company said it took in $6.1 billion in the second fiscal quarter, a 3-percent jump in quarterly revenue over the previous year, it reduced its full-year expectations to $25.2 billion. That downgrade comes despite the company returning net earnings of 43 cents per share, in line with second-quarter results in 2014 and slightly higher than analysts' expectations.

Last January, the revenue outlook had been $26.1 billion before EMC lowered it.

Tucci also said EMC will reduce costs, and that includes jobs. The CEO projects $50 million in cuts in the fourth quarter of 2015 and $850 million in annual expenses by 2017.

What does the road ahead look like?

The results signal a company at a crossroads, needing to make “tough decisions,” in Tucci's words. The goal is to maximize areas of strength and add new ones as the company and its competitors charge into a cloud-based future.