|By Maureen O'Gara||
|January 29, 2013 01:00 AM EST||
Virtualization maven VMware, EMC’s prized possession, has hit a nasty pothole and plans to regroup.
It’s going to cut roughly 7% of its workforce or 900 people on the expectation that its revenues are going to drop because corporate customers and federal accounts, it bread and butter, are cutting back, some poached by Microsoft, which is said to be forcing VMware to cut its prices.
VMware is also going to exit some lines of business to focus on what is strategic – without saying what – and consolidate facilities this year.
It will take a charge of $90 million-$110 million to cover all the costs.
Its stock fell almost 15% after-hours Monday as a result, skittering to $83.99.
The company figures the best it can do this quarter is sell somewhere between $1.17 billion and $1.19 billion, up 11%-13%, although Wall Street was counting on $1.25 billion.
It said it won’t see an uptick in contract renewals until the second half. It might see license growth of only 8%-11% this year.
For the full year, the company sees $5.23 billion to $5.35 billion, on license revenue growth of 8% to 11%. That is below the consensus for $5.43 billion.
Ironically in Q4, which it reported Monday, it made $205.8 million, or 47 cents a share, up 2.7%, on revenues up 22% to $1.29 billion, more than expected.
Despite the headcount cut, VMware means to keep hiring, ending the year up a thousand.
Pat Gelsinger is now VMware’s CEO, having replaced Paul Maritz, who is now working on strategy for EMC.
- Source Claims SCO Will Sue Google
- Latest SCO News is Plain Weird
- SCO Claims Linux Lifted ELF
- IBM Tells SCO Court It Can't Find AIX-on-Power Code
- HP Starts Pushing Desktop Linux
- Linux Business Week Exclusive: Linux Kernel To Be Re-Written To Counter Microsoft FUD
- CSN Asks Judge To Unseal the SCO-IBM Court Record
- IBM's Got Its Head in the Clouds
- Noorda's Daughter Committed Suicide
- SCO vs IBM Latest: SCO To Request Unsealing of Most Documents, Claims O'Gara
- Novell Tried to Buy SUSE, Sources Say
- IBM CEO Ordered to Turn Over Linux Secrets to SCO