24-01-2016, 08:48 #1
[EN] VMware Reportedly Prepping Layoffs in vSphere
A source close to VMware tells SDxCentral the layoffs are concentrated near the vSphere franchise rather than at newer product areas such as the NSX platform for network virtualization. The cuts are motivated partly out of concern that older businesses such as vSphere are no longer the innovation engines of the company and are running out of growth potential, the source said.
January 22, 2016
Sources close to the server virtualization giant said the company will lay off up to 900 people, or about 5% of its global head count, next week. VMware’s fourth quarter earnings will be released Tuesday, January 26. According to its corporate facts page, Palo Alto, Calif.-based VMware employs about 18,000 people worldwide.
A VMware spokesman had no comment for this story. But cuts would not be unexpected. EMC, which owns about 80% of VMware, has already launched layoffs, which will cost about $250 million.
These changes emanate from the difficulty Dell and EMC have had getting investors, especially VMware investors, to swallow this deal. VMware is one of several “EMC Federation” companies, including RSA Security, VCE, and Pivotal. Cynics said that by buying EMC, Michael Dell is getting VMware at a bargain basement price, since VMware stock has outperformed EMC shares. Then, their thinking goes, he will turn around and sell off VMware at a profit, a scenario that left current VMware shareholders feeling ill used.
And hence the growing perception that the VMware tracking stock, planned as part of this deal, won’t be worth enough to make shareholders whole.
EMC and its federation companies have made moves to placate that constituency. EMC and VMware, for example, have already gone back to the drawing board with VMware chief executive Pat Gelsinger and EMC boss Joe Tucci, reversing plans to move VMware’s vCloud Air business into EMC’s Virtustream unit.
Not only that, EMC pulled VCE back into the mother ship earlier this month, naming Chad Sakac, head of EMC’s global systems engineering group, to replace VCE president Praveen Akkiraju, while retaining his current title. That move was reportedly accompanied by layoffs at VCE, which is now a business unit of EMC as opposed to a full sort-of-independent member of the EMC Federation.
The closing of big mergers and acquisitions is typically conditioned on the target companies hitting revenue or profitability goals. If sales aren’t flowing nicely, the only way to meet those goals would be cut costs. And that may be just what we’re seeing here.
Other sources close to VMware could not confirm the 900 number, but said VMware has been shedding jobs through attrition and targeted layoffs already. Several high-ranking sales people in the New York metro area, for example are gone. Ditto some global sales managers.
What is that curse about living in interesting times?
27-01-2016, 07:49 #2
VMware to cut 800 jobs, sees weak 2016
The company has been hurt by slowing economic growth in markets outside the United States. In particular, it cited weak bookings for its software in China, Russia, and Brazil.
Sai Sachin R and Sarah McBride
Tue Jan 26, 2016
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.
The Palo Alto, California-based company also said it would cut about 800 jobs. At the same time, VMWare, whose parent, EMC Corp is being acquired by Dell Inc [DI.UL], appointed EMC Chief Financial Officer Zane Rowe as its finance chief, replacing Jonathan Chadwick.
VMWare, like many technology providers, is struggling to keep pace with its customers' efforts to move key computing infrastructure to the cloud, meaning remote data centers.
VMware shares fell 5 percent in extended trading on Tuesday, while EMC shares declined 1.4 percent. The company, whose flagship product helps customers cut costs by running multiple operating systems on a single server, has been hurt by slowing economic growth in markets outside the United States, which account for nearly half of its revenue. In particular, it cited weak bookings for its software in China, Russia, and Brazil.
But the company noted some bright spots in newer businesses, such as NSX, which makes networking more efficient. That business is on track to generate $600 million annually, VMWare said, up from $200 million a year ago.
Customers like NSX in part because it provides an additional sever-by-server layer of security, on top of precautions at the data center overall, said Martin Casado, general manager for networking and security at VMWare.
"If someone gets over the wall, you still have a guard at every house," he said. "It can limit the ability of the breach to grow."
The company forecast revenue of $6.79 billion-$6.94 billion and an adjusted profit of $4.07-$4.16 per share for 2016.
Analysts on average were expecting revenue of $7.21 billion and earnings of $4.20 per share, according to Thomson Reuters I/B/E/S.
VMware, which had nearly 19,200 employees at the end of 2015, said it would take a charge of $55 million-$65 million in the first half of this year related to the job cuts.
VMware's lackluster forecast overshadowed strong fourth-quarter results.
The company's net income rose 14.4 percent to $373 million, or 88 cents per share, in the quarter ended Dec. 31, helped by a 12.6 percent jump in its services revenue.
Revenue increased 9.7 percent to $1.87 billion, topping the average analyst estimate of $1.85 billion.
Excluding items, VMware earned $1.26 per share, beating analysts' expectations by a cent.
27-01-2016, 08:15 #3
VMware says vSphere in decline, new multi-cloud plan will ensure growth
Virtzilla fires 800, crimps vCloud Air, doubles down on new products
27 Jan 2016
VMware is setting itself up for life after vSphere, outlining a new multi-cloud strategy and insisting its newer products are all growing nicely.
It also said it will scale back its vCloud Air cloud service, and fire about 800 staff as it moves people into areas likely to fuel growth.
VMware execs used today's Q4 2015 and FY 2015 financial results announcement to explain that vSphere sales fell last year and are expected to keep falling. That drop in core compute virtualisation sales will be offset by faster growth for new products. The next 12 months have therefore been declared a year of transition, but by 2017 VMware reckons it will be poised for “accelerated long-term growth.”
Evidence for the shift comes in the form of nice numbers for the three products VMware created as growth projects, namely NSX network virtualisation, VSAN for virtual storage, and AirWatch for end-user computing.
NSX is now a US$600m business, and growing fast. End-user computing now has an annual bookings run rate of over $1.2bn. AirWatch even turned a modest profit in Q4. VSAN is doing $100m a year and was referred to as a “hyperconverged” product. VMware even claimed that when one looks at the hardware sales associated with VSAN, it may be the number one hyperconverged vendor, an odd claim given its own EVO:RAIL – pitched as a competitor to the likes Nutanix and SimpliVity – didn't get a mention in the CEO and CFO's conference call today with analysts.
vCloud Air is also doing about $100m a year, but VMware has decided it will narrow its focus and stop pouring capital into the business: any ambition Virtzilla had to provide a broad competitor to the likes of AWS and Azure are now over. The company's focus is now to offer vCloud Air to core customers, but to make sure that vCloud Air network partners, who create clones of the service, receive a steady stream of shiny new things to offer customers.
Rival clouds are now seen as an opportunity for VMware's next wave of growth, as CEO Pat Gelsinger announced that VMware has built a cut of NSX that can create virtual networks spanning on-premises kit plus workloads in Azure and Amazon Web Services. Testing of this code is already under way, with a view to making it possible to consider a multi-cloud rig as a single logical entity and thereby “transcend the limitations of any cloud service.” VRealize and AirWatch will also get the multi-cloud, multi-device treatment.
The software-defined data centre vision therefore expands to become a software-defined data centre spanning multiple sites and/or providers.
There's some pain to come as in order to focus on its growth products VMware will dispense with the services of about 800 staff. Those that remain will be focussed on the hot products, which doesn't suggest rapid vSphere innovation is on the agenda.
All this new planning is of course being done in the name of the only thing that ultimately counts for a listed business: enhancing shareholder value. VMware did okay on that front in all of 2015 and the year's fourth quarter.
For Q4, revenues hit $1.87bn, an increase of 10 per cent from the fourth quarter of 2014 and up 12 per cent year-over-year on a constant currency basis. Earnings per share were a cent above expectations and revenue was $20m higher than forecast.
GAAP total revenues for all of 2015 were $6.57bn, an increase of nine per cent from 2014, or up 12 per cent year-over-year on a constant currency basis.
The company remains rudely profitable – GAAP income for the year was $997m - and has a profit margin exceeding 30 per cent.
VMware's execs were at pains to point out that those numbers look even better when one considers that its Russian, Brazilian and Chinese business have sunk nastily due to economic conditions, and that it paid $75.5m to settle a price-fiddling dispute with the US government.
Gelsinger acknowledged that customers and investors alike remain rightly concerned about just what will happen to VMware when it becomes a part of Dell, but said he thinks there's nothing but sunshine once Dell's sales force starts to push Virtzilla's wares.
The earnings call also saw VMware announce that chief financial officer Jonathan Chadwick is leaving the company. His replacement will be Zane Rowe, who currently holds the same post at parent biz EMC.
27-01-2016, 20:06 #4
VMware moves the Workstation Development team to China by firing the US-based one
Desktop hypervisors haven't been the company's bread and butter since the early 2000s when it entered the server virtualisation business.
27 Jan 2016
VMware has fired the US-based development teams that worked on its Fusion and Workstation desktop hypervisors, the products that gave the company its start.
News of the layoffs made it onto Twitter, of course, and has also reached a blog by former VMware team member Christian Hammond.
Thelayoff.com also features former and current employees lamenting the decision, on the grounds of having been fired, or feeling that VMware has made a silly decision.
@that_shaman I (and the entire VMware Fusion and Workstation teams) just got laid off today. What does your change look like?
— Jason vanRijn Kasper (@jdotk) January 26, 2016
The site also contains posts from purported VMware employees suggesting that work on the two products will continue in China.
The Register asked VMware to confirm the layoffs and to explain the future of the products and were told: “We can confirm that the restructuring activities will not impact the existence of any current product lines.”
The company also sent the following statement:
In some cases, roles and responsibilities associated with particular businesses will be moved to other regions and office locations. VMware continues to invest in all of its offerings across the portfolio, with emphasis on our growth products.
You'll hear remarks about growth products a lot from VMware because, as we reported earlier today, the company has admitted that compute virtualisation is a declining business and its network virtualisation, storage virtualisation and hybrid cloud offerings are its future earners.
Desktop hypervisors haven't been the company's bread and butter since the early 2000s when it entered the server virtualisation business. In 1999, however, developers responded very well to Workstation's ability to let them run guest operating systems on the desktop. Fusion came along in 2007 and brought desktop virtualisation to the Mac, again winning a dedicated user base.
Both products have had annual updates in most years, with last year's versions adding GPU support and more cloudy bits. Both are also, according to Hammond's post, profitable.
But not profitable enough, it appears, that saving some money by moving development work to a cheaper country doesn't make sense.
Workstation's place in VMware's history makes this decision an emotive one. But desktop hypervisors are hardly a critical category any more. Fusion and Workstation are widely held to be superior to their rivals, but with one of those rivals being the consumer-directed Parallels, that's not remarkable.
Desktop Hyper-V is baked into some versions of Windows, making it a more problematic rival on grounds of ubiquity. The other significant player in the space is Oracle's free VirtualBox, which is released under the GPL. Which doesn't sound like the worst idea ever to The Register's virtualisation desk, although Fusion and Workstation probably have enough ESX in them to make it unlikely VMware would ever let the code run wild.