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VMware sees meagre profit growth and sheds 900 jobs

Revenue growth doesn't help the bottom line
Tue Jan 29 2013, 11:21
VMware Horizon phone virtualisation

VIRTUALISATION SPECIALIST VMware announced a two percent increase in quarterly profits despite an impressive 22 percent increase in sales and announced 900 job cuts.

VMware, which now has ex-Intel executive Pat Gelsinger at the helm, continued to forge closer ties with Gelsinger's most recent former employer EMC in the fourth quarter of 2012. The firm posted revenues of $1.29bn, a 22 percent increase from the same period in 2011, but profits remained largely stagnant at $205.7m, while the firm announced 900 job cuts.

The firm's fiscal 2012 was largely summed up in its final quarter with $4.6bn in annual revenues, a 22 percent increase from 2011, while profits for the year rose just three percent to $745m.

VMware CEO Gelsinger said, "2012 was a strong year for VMware, with solid Q4 results despite a tough economic environment. We see a tremendous market opportunity in 2013 and beyond, as we focus on what our customers value most, VMware's role as a pioneer of virtualisation technologies that radically simplify IT infrastructure from the datacenter to the virtual workspace."

VMware is also shedding 900 jobs, with the firm claiming the staffing cuts will come in the company's non-core areas such as presentation software. The firm said it expects the job cuts will cost between $70m and $80m, while consolidating its business units will cost a further $20m to $30m.

VMware has been the poster child virtualisation outfit for the best part of a decade, however even the cloud, with its emphasis on virtualisation, hasn't been able to help the firm generate significant profit growth. µ


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