Worcester Business Journal

4 Worcester Business Journal • August 3, 2015 www.wbjournal.com D ata storage is in a "sea change," EMC Corp. CEO Joseph Tucci said in his company's web- cast July 22, the day the Hopkinton-based company announced mixed second-quarter finan- cial 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-larg- est 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 emerg- ing technolo- gies, while retaining the core compe- tencies 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 differ- ent aspects of traditional and transitional data storage. And what about VMware? As part of its "federation" strategy, Tucci also strong- ly 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, need- ing 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. n OXFORD — IPG Photonics reported a second-quarter revenue jump of 22 percent, as well as a 25-percent rise in earnings per share, thanks in part to increased sales of its high-power fiber lasers, the manufacturer announced. The company attributed its record rev- enue of $235.1 million to expanded demand for its fiber lasers in materials processing applications. Revenue for the second quarter of 2014 was $192.2 million. Earnings per diluted share were $1.15 for the second quarter, which ended June 30. That was up from 92 cents. MILFORD — Waters Corp. reported a 12.4-percent rise in earnings for the second quarter, along with a 3-percent jump in sales, the manufacturer of laboratory instruments announced. Waters' earnings per diluted share, $1.27, jumped from $1.13 in the sec- ond quarter of 2014. The company said second-quarter sales rose to $495 million from $482 million in the sec- ond quarter of 2014, but they were dragged down by foreign currency translation, which Waters said cut into sales by 7 percent. WESTBOROUGH — Business con- sulting and technology outsourcing company Virtusa saw a double-digit increase in revenue in the first quarter of its fiscal year, raised its revenue forecast and announced the acquisi- tion of an Atlanta-based tech consul- tancy. Virtusa said revenue increased 20 percent year over year to $134.8 million. Net income, meanwhile, was $10.1 million, or 34 cents per diluted share, down from $11.6 million (39 cents) in the fourth quarter of fiscal 2015, but a jump of $9 million (31 cents) over the first quarter of fiscal 2015. Virtusa increased its revenue forecast for the year to between $582 million and $594 million. Virtusa also expanded its reach with the acquisi- tion of Agora Group Inc., of Atlanta in an all-cash deal worth $7.5 million. FRAMINGHAM — The TJX Cos. will buy an Australian retailer, Trade Secret, for approximately $58.5 mil- lion, TJX announced. The parent of retailers T.J. Maxx, Marshalls and HomeGoods said it has reached an agreement to buy the off-price retailer, with 35 stores in Australia, from Gazal Corp. Ltd. for $80 million Australian dollars (about $58.5 million U.S.). TJX said it operates a buying office in Australia but doesn't have stores there. The acquisition highlights opportuni- ties for international growth, Chairman and CEO Carol Meyrowitz said in a statement. WORCESTER — Worcester has been ranked No. 1 in the nation for bring- ing nutritious food to the area through farmers markets, a study found. The study, by BetterDoctor.com, looked at farmers markets that accepted federal WIC credits and SNAP dollars as an indication of the markets' service of lower-income residents. Worcester, with 23 farmers markets, received a perfect score, boasting 1.26 markets per 10,000 residents. The city's Main South market, operated by the Regional Environmental Council, an environmental justice organization in Worcester, was praised in the study for offering SNAP matching coupons as well as WIC and Senior Farmers Market coupons. WORCESTER — UMass Memorial Health Care will spend $700 million for a new electronic health records system and to revamp its IT infra- structure, CEO Dr. Eric Dickson announced in a blog post. Dickson said UMMHC would contract with Wisconsin-based health care software provider Epic Systems to provide elec- tronic health records services for 10 years. The administration had already received buy-in from employees, hav- ing surveyed front-line caregivers on where they would prefer to see the organization invest capital. The sys- tem is expected to launch in July 2017 at UMass Memorial Medical Center in Worcester, and at Marlborough and Clinton hospitals. It will then be extended to HealthAlliance Hospital campuses in Leominster and Fitchburg. MARLB OROUGH/AUBURN — Solomon Pond Mall in Marlborough and the Auburn Mall are among 12 shopping sites in Massachusetts and New Hampshire that have added charging stations for drivers of electric vehicles, the malls' owner said. Simon Malls and NRG EVgo, a subsidiary of NRG Energy, announced the installa- tion of Freedom Station sites that can recharge shoppers' vehicles in up to 30 minutes at the 12 malls. LEOMINSTER — Nurses at HealthAlliance Hospital have rati- fied a new, two-year labor contract that improves staffing ratios and adds positions, according to their union, the Massachusetts Nurses Association. The nurses and the hospital, part of the UMass Memorial Health Care sys- tem, had reached a tentative agree- ment June 30, a week after nurses authorized a one-day strike after the two sides had failed to come to terms on a new deal. The nurses picketed twice in the last year, following the expiration of their previous contract in May 2014. A sticking point for the REGIONAL BRIEFS >> Continued on next page Verbatim "I am not, nor will I ever be. … I just – I'm interested in Massachusetts." Gov. Charlie Baker, about whether he plans to run for president. He was replying to a reporter's suggestion that his election to the executive committee of the Republican Gover- nors Association could be a springboard to a presidential bid. Source: State House News Service, July 24 >> "I refuse to mortgage the future of the city away." Boston Mayor Martin J. Walsh, hours before the U.S. Olympic Commit- tee dropped Boston from consideration for hosting the 2024 Summer Games. Walsh said he would not be rushed into signing a host city contract, and did not want taxpayers to foot cost overruns. Source: State House News Service, July 27 >> "I'm honored to be chosen by the administration and looking forward to the challenge and this opportunity. It will be nice going out on top." Geoffrey Gardell, Worcester deputy fire chief, who will become the city's fire chief next week, replacing the retiring Gerard Dio. Source: MassLive.com, July 27 >> CENTRALMASS In Review BRIEFING: EMC'S TOUGH OPPORTUNIT Y

• Cover