VMware, Inc., a cloud computing and virtualization software company and a subsidiary of Dell Technologies Inc (NYSE:DVMT), announced earlier in the month that hundreds of employees would be shed, with a recent WARN report putting that number at 159 in Palo Alto. The VMware layoffs are reportedly mainly affecting the marketing department, potentially cutting as many as 20% of that segment of the workforce.
The Dell Technologies subsidiary was also rumored to be looking into a Dell reverse merger, which precipitated a massive VMware stock decline. The company’s value fell from $150.00 per share at Friday’s close to a hair over $121.00 by Tuesday afternoon.
The VMware job cuts will be taking place by March 12, according to the VMware WARN notice.
In a statement to El Reg on Friday, a VMware spokesperson said, “We can confirm that there has been a small reduction in force at VMware in January 2018. Work force rebalancing is a continual activity across VMware’s businesses and geographies to ensure that resources are aligned with business objectives and customer needs. We continue to recruit in areas of strategic importance for the company.”
The company also released a question-and-answer sheet as a statement to The Register.
“VMware regularly evaluates its workforce and looks for opportunities to streamline business processes, advance innovation, focus on customer needs, and deliver better results,” read one of the statements provided.
The VMware layoffs in Palo Alto, CA, represent a small cut from the company’s large workforce that numbers 21,557 worldwide, according to the company’s figures.
Despite the VMware layoffs in 2018 and the drop in stock price due to the Dell reverse merger possibility, the company performed remarkably well with its latest financial earnings report, with revenues of $1.98 billion, up 11% year over year, and $20.0 million more than analysts had anticipated. Profit also jumped by 40% to $443.0 million.
For workers affected by the VMware layoffs in 2018, however, the strong financial performance provides little solace as they find themselves without jobs while shareholders fill their pockets regardless.
VMware Share Dropped to 10% After the Report on Dell Reverse Merger
The VMware layoffs in 2018 is a relatively small event for the company, however, when compared with the potential for a Dell reverse merger in the works.
The VMware-Dell merger could be one of the biggest to ever occur in the industry.
As it stands, Dell currently owns the majority of VMware with about 80% under its wing, acquired when it bought EMC Corp. for $67.0 billion. VMware could now turn around and buy Dell, a move which could help the computer company chip away at some of its $50.0-billion debt.
The VMWare stock decline, however, may present a hitch in the proceeds as the company experienced a strong decline in the past few days. While VMware has otherwise enjoyed a strong showing on the stock market in 2017, the company now finds itself falling at a rapid clip, largely due to the discussions surrounding the potential VMware-Dell merger.
At the moment, the company finds itself both in the midst of making 159 cuts to its workforce while also negotiating a potential monumental deal with Dell, making 2018 a busy time for VMware.
“WARN Report,” Employment Development Department – State of California, January 25, 2018.
“VMware: New year, new job – you’re fired,” The Register, January 12, 2018.
“VMware shares drop 10% on report of Dell reverse merger possibility,” MarketWatch, January 29, 2018.
“VMware Plunges on Report It May Acquire Dell in Reverse Merger,” Bloomberg, January 29, 2018.