VMware, Hammered by Dell-EMC Acquisition, Slashes 800 Jobs
At present, its fourth quarter results on Tuesday, VMware announced that raze 800 positions, reduce the guidelines for next year and replace its CFO.
The latest series of problems for the vendor EMC Corp. software-controlled data center is further proof that the proposed acquisition by Dell Inc. EMC largest ever heavy bristles $ 67 trillion-the technology sector jewel crown reputation federation EMC. VMware shares fell more than 40% since the acquisition was announced late last year.
"2015 was a difficult period for investors to VMware," said general manager Pat Gelsinger during a conference call with analysts. However, he added, "we believe that our expanded relationship with Dell will be very positive for our customers and for our shareholders."
This has not been the case so far. shareholders of VMware, which makes software that increases the efficiency of computers in data centers, expressed concern that the structure of the acquisition, which the shareholders of EMC with VMware award of shares would result in a sell these shares once the agreement was concluded. The merger has created uncertainty for shareholders and customers about newly merged strategic fit with Dell-EMC VMware.
"The hangover from this acquisition paralyzes VMware short term," said Brent Thill, an analyst at UBS AG.
For VMware, the EMC-Dell deal was the first painful blow from one to two strokes. The second came from the leaders of the cloud Amazon.com Inc. and Microsoft Corp., which have been courting enterprise customers by selling VMware computing capacity over the Internet. Amazon saw its cloud business by 78% in the last quarter. It is set to release its report earnings later Thursday.
These services can prevent the need for data center business running VMware software. VMware is widely regarded as a laggard in the market for cloud computing.
VMware in October announced plans to participate in a joint venture with EMC cloud computing, known Virtustream. But the deal was not popular with the shareholders of VMware and companies plunged the plan two months later. The layoffs this week have reduced staff VMware vCloud Air business unit cloud computing, which further compromises the position of a cloud tacit admission of the company that competition in this market is just too fierce.
Mr. Gelsinger said Tuesday that the service would have an accent "Closer" in 2016.
Mr. Thill says he can now make sense for VMware out partnerships with leaders like Amazon cloud, a strategy already applied by the company Hewlett Packard, which last year gave up head to head competition with Amazon in the market cloud.
"The reality is that if customers need who want to be on Amazon, but run many VMware ... It is in the best interest of both companies to work together," Thill said.
Observers fear that the recent selloff in technology stocks could hinder business acquisition of Dell high leverage by making it more difficult for the company to settle around $ 10 billion of assets that are expected to be on the block . EMC shareholders should vote on the acquisition in early May.
VMware also ratcheted down its profit forecast for the year, saying that 2016 revenues will be between $ 6,785 and $ 6,935 million, an increase of 2% to 4% compared to 2015 figures analysts had forecast income to a total of $ 7.2 billion, an increase of 9% next year, according to data compiled by Thomson Reuters.
The reduction guidance is mainly due to the weakness of the economy is largely in countries such as Brazil and China, as well as "geared more specific about the cloud approach," Jonathan Chadwick, that company replaced as CFO on Tuesday, said in a telephone interview. Mr. Chadwick had been with VMware for three years and will be replaced by Zane Rowe, former chief financial officer of EMC.
VMware shares fell nearly 4.4% in after-hours operations Tuesday.
For the fourth quarter, which ended in December, VMware announced adjusted earnings of $ 1.26 per share on revenue of $ 1.87 billion profit. Both numbers beat expectations of $ 1.25 per share and $ 1.52 trillion of analysts.
