EMC 2002 Annual Report Download - page 33

Table of Contents
technological resources, larger distribution capabilities, earlier access to customers and greater opportunity to address customers' various information
technology requirements than us. We also compete with many smaller, less established companies who may be able to focus more effectively on specific
product segments or markets. Historically, we have competed primarily on the basis of our products' features and performance. As product pricing becomes a
more important criteria for our customers, we may experience increased competition from certain low-price competitors.
Companies may develop new technologies or products in advance of us or establish business models or technologies disruptive to us. Our business may
be materially adversely affected by the announcement or introduction of new products, including hardware and software products, and services by our
competitors, and the implementation of effective marketing or sales strategies by our competitors. In addition, as we increase our software and services
businesses, we may face new competitive challenges.
We may have difficulty managing operations.
In October 2002, we announced a restructuring program to further reduce our cost structure. The restructuring program included a reduction in force of
approximately 1,500 employees and the closure of certain facilities. Our future operating results will depend on the success of this restructuring program as
well as on our overall ability to manage operations, which includes, among other things:
• managing our business with fewer employees
• retaining and hiring, as required, the appropriate number of qualified employees
• enhancing, as appropriate, our infrastructure, including but not limited to, our information systems
• accurately forecasting revenues
• transitioning our sales force to sell more software and services
• managing inventory levels, including minimizing excess and obsolete inventory, while maintaining sufficient inventory to meet customer
demands
• controlling expenses
• managing our manufacturing capacity, real estate facilities and other assets
• executing on our plans
An unexpected further decline in revenues without a corresponding and timely reduction in expenses or a failure to manage other aspects of our
operations could have a further material adverse effect on our business, results of operations or financial condition.
Competitive pricing and difficulty managing product costs could materially adversely affect our revenues and earnings.
Competitive pricing pressures exist in the information storage market and have had, and in the future may have, a material adverse effect on our
revenues and earnings. There also has been and may continue to be a willingness on the part of certain competitors to reduce prices or provide information
storage products or services, together with other products or services, at minimal or no additional cost in order to preserve or gain market share. We currently
believe that pricing pressures are likely to continue.
To date, we have been able to manage our component and product design costs. However, there can be no assurance that we will be able to continue to
achieve reductions in component and product design costs. Further, the relative and varying rates of increases or decreases in product price and component
cost could have a material adverse effect on our earnings.
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