Fight recession by investing, says EMC's fearless Tucci
While some IT firms are battening down the hatches, EMC's Joe Tucci says that a recession is the perfect time to position the business for growth, writes Eamon McGrane
JOE TUCCI should have been tired and frayed around the edges. He and his entourage of fellow EMC execs checked into their hotel room in Cork at 4.45am after arriving in Ireland by private jet.
You'd think that high-flying executives would arrange a more civil time to turn up. But such is the life of a self-professed 24/7 CEO and chairman of one of the world's largest IT companies.
When he sat down with The Irish Timesat about 1.30pm he looked remarkably fresh, immaculately groomed and tailored and bearing no signs of jet lag.
Tucci was in Ireland to celebrate 20 years of EMC in Ovens, Co Cork and, more importantly, to announce a €20 million investment in RD at the site which will bring in 50 new engineering jobs.
Tucci is credited by many IT analysts as the man who turned EMC around, reached out to new customers and expanded the company's product portfolio.
When he was installed as CEO in 2001 the dotcom bubble burst, hitting EMC sales, and causing the company's stock price to plummet on Wall Street.
Tucci's strategy was to expand into different business areas such as software and services, make acquisitions and bring in new customers thus lessening the "eggs in one basket" reliance on hardware.
And he believes that Ireland has been an important part of that strategy. After all it was EMC's first manufacturing facility outside of the United States.
"If you look at the last quarter it was very successful but we grew internationally twice as fast than the US and it now makes up 48 per cent of our revenues and the seat of all that goes back to our Irish heritage," said Tucci.
It's not just PR speak either as it is easy to see how EMC's Irish operation has been a cornerstone for the company's success as it allowed it to move into the vast European market. The company now does business in approximately 85 countries.
Tucci has visited Ireland and the Cork plant several times and has seen how it has changed through the years.
"There is no single facility we have, even in the US, that is the microcosm of EMC that there is in Ireland.
"We have 22 functions here and there's no other city in the US where we have that.
"In Cork, we have manufacturing, RD, customer service, professional services, backoffice, a briefing centre and so on. We're really learning a lot of lessons here."
One of the interesting things about EMC's investment announcement was its timing. With recession on most peoples' minds, EMC has decided to go against the trend and put its money where its mouth is.
Tucci believes that in such times it is still important to have a "growth culture" and expand market share and become better positioned because when the economy picks up then you are ahead of the competition.
"We're using the strength that we have in terms of market position and cash in terms of market capital to say 'okay we're going to invest through this cycle'," says Tucci.
"Obviously we're being frugal where we can. But in areas such as RD, which is setting the table for tomorrow, and areas such as expanding sales internationally we are investing pretty heavily and it's going to pay big dividends for us."
Indeed EMC's recent second quarter financial results saw 18 per cent revenue growth over the previous year's second quarter, netting returns of $3.6 billion.
Despite these impressive figures Tucci's own take on the so-called recession is that the economy is currently a tough place to be doing business in and it will stay that way for quite a while.
He believes there will be a minimum of several more quarters of tough times.
"Will it get much worse? No, I don't think so. Is there potential for it to get a little worse? Yes."
Tucci said the addition of the RD initiatives highlighted the esteem in which EMC holds the Irish operation and was a testament to the Government's work and the skilled talent pool in Ireland.
"We want to tap into that and we're going to continue to manufacture here and expand.
"We love the talent you're producing here and we know it will make EMC a better and more successful company."
With all the changes going on in the IT industry and within EMC, is storage still a good bet on the IT roulette wheel? Tucci believes it is and pointed to the IT industry analysts who monitor the marketplace.
"Organisations such as Goldman Sachs conduct CIO surveys asking what they plan to spend money on and who they'll be doing business with. It works out that virtualisation, storage and security are really high up on the list. And we are also mentioned as a company they'll be doing more business with.
"A few years ago our lifeblood was pretty much high end storage now we've expanded that to mid and low end. We've also acquired Iomega which puts us into the consumer storage space. We also have products in business continuity, software, security, content management, virtualisation (VMware) and so on."
Last August EMC put 10 per cent of VMware, a company it acquired in 2004, on the stock exchange. Tucci said the reason for this was to add value to shareholders as it had an asset which it felt was trapped inside the EMC portfolio. It became one of the most successful US initial public offerings of 2007. "We wanted to show the world what it was really worth. And people who were working on the software could get a 'piece of the rock'."