VMware Rocks Its Earnings, but Also Confirms 800 Layoffs

The Palo Alto, Calif.-based company reported that its software licensing income rose 11 percent year over year to $825 million.

Revenues for Q4 meanwhile rose 10 percent from the year before to United States dollars 1.87 billion.

In its financial results announcement for the fourth quarter, Vmware dropped a bomb on its employees as the cloud services company announced that it will lay off employees while it will also replace the CFO of the company.

The sales slowdown and disappointing bottom-line forecast comes at a bad time for VMware parent company EMC, which is prepping itself for a sale to PC giant Dell.

Excluding items, VMware earned $1.26 per share, slightly higher than the average analyst estimate of $1.25. Top Company Interviews Joe Tucci, EMC Chairman and Chief Executive Officer, commented, ‘I’d like to thank Zane for his extraordinary accomplishments and leadership since joining EMC, and for enthusiastically embracing the opportunity to become CFO of VMware. On Oct. 7, five days before the Dell deal was announced, VMware’s stock was selling for $82. Shortly after, investors were spooked again when news that an EMC cloud acquisition would be accounted for as half-owned by VMware, a move that would generate losses for VMware. VMware shares fell as much as 13 percent in extended trading.

“We are seeing the results of our product transitions and have positive momentum with our newer solutions heading into 2016”, said Jonathan Chadwick, chief financial officer, chief operating officer and executive vice president, VMware. EMC promoted Denis Cashman, a 28-year EMC finance veteran, to CFO.

Clearly theyre going to have to explain whats happening, Abhey Lamba, an analyst at Mizuho Securities USA Inc.

Dell’s planned purchase, the biggest technology acquisition ever, will combine EMC’s dominance in storage devices with closely held Dell’s No. 2 position in servers, the powerful machines that run corporate computing.

VMware Inc forecast 2016 revenue and profit below analysts’ expectations, suggesting the software maker’s strong growth in new businesses was not enough to compensate for weakness in its traditional server-virtualization software.