VMware Names New CFO, Will Cut 800 Jobs
January 26 2016 - 5:20PM
Dow Jones News
VMware Inc., seeking solid footing after being caught in the
middle of the massive Dell Inc.-EMC Corp. merger, said Tuesday it
was cutting some 800 positions and EMC's finance chief would
replace a key executive.
The California-based company also posted stronger-than-expected
results for its latest quarter with license revenue -- which
generates nearly half of the top line -- climbing 6%.
The company unveiled the "restructuring and realignment" of
about 800 roles and said it planned to take a charge between $55
million and $65 million during the first half of 2016.
VMare also announced the departure of chief financial officer
and chief operating officer Jonathan Chadwick. He was slated to be
replaced on March 1 by EMC's CFO Zane Rowe.
The appointment is made as EMC prepares to complete its
previously announced combination with Dell. Once the transaction
closes, EMC will be combined with Dell and VMware, which is
majority-owned by EMC, will remain a publicly traded company. The
Dell-EMC deal has left VMware investors wary, though, as about
one-third of the stated deal value is riding on a plan to create a
tracking stock for VMware. Shares of VMware have dropped 40% in the
past 12 months.
For the quarter, VMware earned $373 million, or 88 cents a
share, compared with a profit of $326 million, or 75 cents a share,
a year earlier. Excluding certain items, adjusted earnings were
$1.26 a share, up from $1.08 a share. Sales rose 9.7% to $1.87
billion.
Analysts surveyed by Thomson Reuters expected earnings of $1.25
a share on $1.85 billion in revenue.
In December, the company, which provides virtualization software
that allows servers and other technology equipment to run more
efficiently, said it wouldn't proceed with a joint venture that
would take over an EMC cloud service called Virtustream. The joint
venture between VMware and Virtustream was announced in late
October shortly after Dell disclosed its $67 billion deal to buy
EMC. Pat Gelsinger, VMware's chief executive, at the time said that
combining the two companies' cloud services would offer customers
more comprehensive services.
But VMware's shares, which already had slid following the
announcement of the Dell-EMC deal, dropped nearly 20% in the wake
of the Virtustream plan. Analysts raised questions about the plan's
impact on VMware's profit margins because of increased spending on
servers and data centers.
Shares of VMware rose 2.5% in after-hours trading.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
January 26, 2016 18:05 ET (23:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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