News

VMware To Cut 800 Jobs in Wake of Dell/EMC Deal

In a news-filled earnings call, the company also announced that CFO Jonathan Chadwick is resigning.

• By Keith Ward
• 01/27/2016

It's no longer just media reports: VMware has officially said it is going to lay off about 800 employees in the first half of 2016.

The news of the layoffs overshadowed VMware's Q4 earnings report, held yesterday. Originally, reports estimated the layoffs at 900, so the pain wasn't quite as severe as initially expected. "We are restructuring approximately 800 jobs over the course of the first half of 2016 and are reinvesting the associated savings in field, technical and support resources associated with our growth products," VMware CFO Jonathan Chadwick said during a conference call to announce the earnings.

Chadwick himself was part of the news during the call, when VMware CEO Pat Gelsinger announced that Chadwick was leaving the company, to "… expand his advisory roles working with a number of companies as a non-executive board member." Chadwick has been with VMware for three years.

Gelsinger announced an immediate successor to Chadwick: Zane Rowe, current CFO of VMware parent company EMC. Rowe, who takes over as of March 1, held executive positions at Apple, United Airlines and Continental Airlines before joining EMC, Gelsinger said.

The layoffs represent just under 5 percent of VMware's total workforce. They are not entirely unexpected, given the massive undertaking of Dell's purchase of EMC. When the $67 billion megadeal was announced last October, the one thing that could be predicted was that shakeups were imminent; mergers of this size are never without major consequences.

A Solid 2015
Although the earnings themselves took a backseat to the news of layoffs and Chadwick's departure, VMware had a solid 2015. Non-GAAP revenues for the year were $6.65 billion, an increase of 13 percent in adjusted year-over-year revenues. License revenues for the year were $2.72 billion, up nine percent in adjusted year-over-year revenues. For the fourth quarter of 2015, revenues of $1.87 billion slightly exceeded analyst expectations. The numbers reflected an increase of 12 percent over 2014 in adjusted year-over-year figures.

Gelsinger pointed out some highlights among the numbers, noting that VMware's end-user computing business now exceeded $1 billion in revenue, joining compute and management in the "billion dollar" club. He also mentioned that NSX, its software-defined networking (SDN) product that is a key part of the company's strategy going forward, doubled in year-over-year revenue, to $600 million. "We believe our emerging networking business will be as transformative to the entire networking and security industries as vSphere has been to the compute and server industries," Gelsinger said.

vSAN, its software-defined storage (SDS) technology, has crossed the $100 million mark, Gelsinger said. It's another part of VMware's vision of a completely software-defined datacenter (SDD).

Scott Ard, editor in chief of the Silicon Valley Business Journal, reported that VMware's state filing related to the layoffs "… included scores of job titles, including a large number of director and manager positions." The date the layoffs will take effect, Ard wrote, is March 28.