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January 30, 2013

VMware to Cut 900 Jobs in Strategic Realignment

By Tracey E. Schelmetic, TMCnet Contributor

Calling it a “realignment of resources,” virtualization software company VMware said this week that it plans to cut 900 jobs, part of a company plan to focus more on its high-potential businesses, as profits remained strong but growth slowed.

The job cuts are expected to come in areas such as SlideRocket, VMWare’s online presentation software. The 900 lost jobs will represent between 7 and 8 percent of the company’s global workforce.

In the announcement, the Palo Alto (News - Alert), California-based company emphasized that it was still expanding, and plans to add a net 1,000 jobs in 2013, Computerworld is reporting this week. The company says it has added about 6,700 jobs during the last three years, and that it will focus on software-defined data centers and hybrid cloud services going forward.

"This includes shifting talent to new roles that support our growth opportunities as well as some targeted headcount reductions," said VMWare CEO, Pat Gelsinger.

VMware was acquired by EMC (News - Alert) Corporation in 2004, and operates as a separate software subsidiary.

Overall, VMware reported $4.61 billion in 2012 – an increase of 22 percent over last year. U.S. revenue grew 22 percent to $2.23 billion. The company’s annual international revenues also grew by 22 percent, to $2.38 billion.

VMware stock dropped more than 20 percent in yesterday’s trading after the announcement of the restructuring and job cuts as well as a disappointing 2013 forecast. Shares dropped as low as $76.33 on Tuesday, representing a 22.4-percent drop from Monday's closing price.

It was the largest drop in the company's share price since 2008 and a new 52-week low. Shares closed at $77.14 – a loss of $21.18, or 21.5 percent.

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Edited by Braden Becker
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