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EMC's sales slide

The storage maker says sales have slipped 9 percent from the previous quarter, explaining that the "IT spending drought got even worse as the third quarter came to a close."

Sales have continued to slip at storage maker EMC, as customers refused to shell out more money for new technology.

The company said Thursday that sales for the third quarter that ended Sept. 30 were $1.26 billion. That figure is up slightly from the same period a year ago but down 9 percent from the second quarter of this year.

EMC recorded a loss of $51 million, or 2 cents per share, excluding after-tax gains from tax-related matters and a year-ago restructuring charge. Including the gains, the company reported net income of $21 million, or 1 cent per share. The results were in line with First Call estimates.

Company executives said they expect fourth-quarter revenue to be flat with the third quarter. Analysts had expected the company to report sales of $1.36 billion, according to First Call.

"As we approached the end of September a significant number of deals, way more than we expected, did not get closed," said EMC CEO Joe Tucci. "The vast majority of these were not lost to competitors. (They) were simply pushed out to other quarters. What we saw was not a continuation of just bumping on the bottom, but a deterioration of IT spending projects."

EMC had already given investors a heads-up that sales were weak. In early October, the company announced it would let go 7 percent of its workers and wouldn't be able to turn a profit in the second half of the year, as it had predicted earlier. Company executives said Thursday that they expected most of the layoffs to take place in the current quarter.

EMC had dominated the high end of the storage market but has been hit hard by the slowdown in technology spending. Last week, EMC and Dell Computer announced a new line of midrange storage products aimed at the lower end of the market.

The company didn't address the Dell partnership directly, but Tucci and Dell President Kevin Rollins will co-host a conference call updating Wall Street about the deal later this month.

Meanwhile, EMC is still being hit hard.

"We are taking further steps to align our costs with the realities of this painful economy," said Tucci.

EMC has lowered its quarterly revenue break-even level to about $1.4 billion, from $1.8 billion in the second quarter of last year. Cash and cash equivalents are at $5.8 billion, about 60 percent of total assets, Chief Financial Officer Bill Teuber said.