After a first-quarter profit and revenue slump, storage giant EMC ( EMC) is putting a serious squeeze on its costs.

The firm's sales slipped 9.2% year over year and missed Wall Street's estimate, prompting EMC to announce Thursday that it would cut even closer to the bone.

"Underscoring demand weakness, the company is initiating another restructuring," wrote Goldman Sachs analyst David Bailey, in a note released Thursday. "This follows a large restructuring ($350 million) announced just 3 months ago."

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Specifically, EMC is looking for cuts that will save an additional $100 million in 2009. During a conference call to discuss its first quarter, EMC CFO David Goulden said that the firm will reduce its information infrastructure costs by around $450 million compared to 2008, a figure that will rise to $500 million in 2010.

The storage bellwether, which announced a slew of job cuts in January, has been working hard to control its expenses but is now ramping up this effort.

Joe Tucci, the company's CEO, said EMC is asking employees to join management in taking a temporary 5% pay cut. "This, and other actions, will keep us at maximum strength," he said, explaining that this will help avoid a repeat of the firm's January job cuts.

Like many tech firms, EMC is clearly wrestling with the effects of the IT spending slowdown, although at least one analyst feels that the company still offers upside to investors.

" EMC's soft top-line was offset by cost restructuring," wrote Jayson Noland, an analyst at R.W. Baird, in a note released Thursday. "We view EMC's consolidated results as fairly positive and expect March to set the EPS low-point for 2009."

The storage company's shares have risen more than 25% since hitting $9.85 in March and are currently trading around $12.36.

R.W. Baird's Noland maintained his "outperform" rating for EMC, citing users' ongoing need for data storage. "We continue to expect EMC to trend slightly better than global IT as we view storage as generally more resilient than most IT hardware," he wrote.

However, the analyst warned that EMC's VMware ( VMW) subsidiary could pose a risk. EMC owns 85% of the virtualization trailblazer, which issued weak second-quarter guidance this week.

VMware forecast second-quarter sales that are either flat or below the $456 million the company recorded in the same period last year. Analysts surveyed by Thomson Financial had forecast second-quarter revenue of $499.25 million.

"Ownership of outstanding VMW shares is a double-edged sword, with EMC's stock benefiting from VMW success and suffering from VMW weakness," wrote Noland.

Despite its sales slump, EMC is adamant that the tech sector is poised for a turnaround but warns that this will not happen until the second half of 2009. "IT budgets are still tight and customers are only buying what they need for today," said Tucci, but added that the second half of 2009 will be stronger than the first.

The Hopkinton, Mass.-based firm, however, estimates that global IT spending will decline as a percentage in the high single-digit to low double-digit range from 2008.

Previously EMC had estimated a spending decline in the mid to high single-digit range. Analyst firm Goldman Sachs estimates a 9% fall in spending compared to last year.

Set against this backdrop, EMC faces the challenge of selling its recently launched high-end V-Max system in this tough environment. V-Max is the latest version of EMC's Symmetrix product, and the storage giant must now lure existing customers onto the new platform.

"We have a very carefully planned transition -- this is the biggest change in the history of Symmetrix," said Tucci. "I have tremendous belief in the success of this product."

EMC CFO David Goulden also struck a bullish tone during Thursday's conference call.

"This is a tough market, but we continue to move forward and invest in R&D and new markets," he said, explaining that EMC invested around $20 million in cloud computing during its first quarter.

EMC, which competes with IBM ( IBM), Hewlett-Packard ( HPQ) and Hitachi Data Systems exited the first quarter with a record $9.8 billion in cash and investments.

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