VMware cuts 900 jobs to refocus on the data centre

After weaker than expected sales in the US, virtualisation software leader announces restructuring

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VMware cuts 900 jobs to refocus on the data centre

VMware is to cut 900 jobs as it refocuses its business and data centre systems and end-user computing.

In order to focus its resources on "priority" product lines, VMware will be reducing its investment in other non-core offerings, including SlideShare, the cloud-hosted presentation software system it acquired in 2011.

The news follows the decision last year that VMware would move 600 employees that work on its cloud application infrastructure software into a new joint venture with parent company EMC called the 'Pivotal Initiative'.

The virtualisation software company made the announcement as it reported its latest quarterly financial results.

Sales for the three months ending 31 December 2012 rose 22% to $1.3 billion but, as COO Carl Eschenbach told investment analysts, "our Q4 US bookings did not come in at the levels we expected... Generally speaking, we saw weakness across the US as a whole".

 

Pat Gelsinger, who joined VMware as CEO from parent company EMC in July 2012, said that he has assessed the balance of investments within the company.

"One thing I have learned over the years is the importance of prioritisation and execution," he said yesterday. "So I have been working with my leadership team to ensure we have the right level of resources in the proper places for 2013 and beyond."

Despite the 900 job cuts, VMware expect to grow its headcount in 2013 by around 1,000. It ended 2012 with around 36,000 employees, up 2,600 (7%) from the start of the year.

VMware said that it expects revenue to grow between around 15% in 2013, lower than analysts' expectations. This triggered a 10% drop in the company's share price.