VMware Announces Earnings, Job Cuts

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In its quarterly report, virtualization powerhouse VMware reported increases in both revenue and earnings, but issued a cautious report for 2013 and announced plans to cut some jobs. As a result, the company’s stock fell sharply.

Chris Preimesberger from eWeek reported, “A week after Google and Apple posted record financial numbers and then watched their stocks slide, VMware on Jan. 28 did the same, showing a double-digit gain in earnings for Q4 2012 while watching the stock tumble 14 percent after the closing bell. This stock dip was all about VMware’s forecast for the current period, which came in below analysts’ forecasts.”

Computerworld’s Jay Alabaster noted, “The company said it had a strong fourth quarter, booking a net profit of US$206 million, up from $200 million a year earlier. Revenue rose 22 percent to $1.29 billion. VMware, which claims its software is used by all of the Fortune 100 companies and 96 percent of the Fortune 1000, added the business environment in the U.S. has been difficult, and it faced a decline in contracts from the federal government in 2012.”

GigaOm quoted VMware CEO Pat Gelsinger, who said, “I’ve learned the importance of prioritization and execution. We will focus first on a portfolio rationalization around the products our customers care most about. Our decision to commit our cloud application efforts to Pivotal is an example. And we will realign resources as we scale back in some areas.”

Reuters added, “Chief Financial Officer Jonathan Chadwick said that strategy included shifting some people to new roles as well as cutting 900 jobs, resulting in a charge of $90 million to $110 million. Most of that would be taken in the first quarter, he said. Despite the cuts, Gelsinger said that ‘we will continue to grow, invest and hire in 2013 in support of our focused growth priorities.’ As a result, he added, by the end of the year VMware’s headcount would be ‘up by approximately 1,000 people.'”