EMC is reorganising its various international operations into a single holding company and repatriating $4bn to EMC USA at a cost of $100m in taxes.
The bare details are laid out in a November 18 SEC filing. This says EMC will transfer:
Certain assets of its RSA and Data Domain entities and legacy foreign corporations owned directly by EMC into a single EMC international holding company. The international subsidiaries acquired in connection with its acquisitions of RSA and Data Domain will be combined into EMC’s existing foreign companies. In connection with the reorganization, EMC’s international holding company will issue to EMC Corporation approximately $4 billion of consideration consisting of stock and cash. This plan is part of EMC’s ongoing cost transformation program and is intended to facilitate EMC’s international expansion, reduce costs, improve the efficiency and effectiveness of the company’s organizational structure, further strengthen the company’s operations and position the company for improved business agility in the future.
The purchases of RSA and Data Domain meant EMC had multiple subsidiaries in the same geographies and these overlaps are being tidied up.
The reorganisation will be completed some time in 2010, in which year "cost reduction actions are expected to generate savings of $500m compared with 2008." There will be no job losses or office closures associated with the re-organisation, according EMC spokesperson Michael Gallant quoted in the Wall Street Journal.
EMC now says "Consolidated EMC revenues are expected to be $4.0bn for the fourth quarter of 2009 and $13.9bn for 2009," and earnings per share will be a little lower.
There is speculation about what EMC might do with its $4bn of incoming funds, with some people thinking of acquisitions. Others think this is just a cost-saving internal re-organisation and, from the EMC earnings and share value point of view, a non-event. ®