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VMware Trims Staff as It Enters Fiscal 2016

By Sean Michael Kerner (Send Email)
Posted January 27, 2016

VMware is sharpening its focus for the new year by cutting staff, even as revenue rises. VMware reported fourth quarter fiscal 2015 revenues on January 26.

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For the quarter, VMware reported revenue of $1.87 billion, for a gain of 10 percent on a year-over-year basis. Net income was reported at $373 million, for a 17 percent year-over-year gain. Server Virtualization

For the full year, VMware reported revenue of $6.57 billion, for a 9 percent gain over 2014. Net income for the year came in at $997 million, up 15 percent.

Looking forward, VMware provided full year fiscal 2016 guidance for total revenues to be between $6.785 billion and $6.935 billion, up 2 percent to 4 percent year-over-year.

Though the company is growing, VMware has made the decision to reduce its workforce.

"We are restructuring approximately 800 jobs over the course of the first half of 2016 and are reinvesting the associated savings in field, technical and support resources associated with our growth products," VMware CEO Pat Gelsinger said during his company's earnings call.

U.S.-Based VMware Workstation and Fusion Teams Shut Down

Among those laid off are members of the U.S.-based VMware Workstation and Fusion teams.

While desktop-based virtualization efforts are under pressure, VMware's network virtualization efforts seem to be going the other way.

"In networking, we had a stellar year growing NSX over 100% year-on-year and bringing our total annual bookings run rate to well over $600 million," Gelinsinger said. "We believe our emerging networking business will be as transformative to the entire networking and security industries as vSphere has been to the compute and server industries."

Gelsinger also provided a hint of more NSX developments to come, including building on the 2015 technical preview of NSX connecting and securing end-points across a range of public clouds.

"Later this year, we will be introducing a new NSX offering, which will enable customers to create secure and encrypted overlay networks across public clouds, including AWS and Azure and on-premises data centers," Gelsinger said. "These new services will provide unparalleled connectivity, security and visibility across multi-cloud IT resources regardless of whether the underlying infrastructure is VMware based or not."

With the pending merger of Dell with EMC, VMware's position has left many questions in the minds of investors. During the earnings call, Gelsinger emphasized that the overall Dell impact is positive.

"I appreciate that 2015 was a challenging time for VMware investors. I know many of you have sought additional clarity about the implications of Dell’s planned merger with EMC," Gelsinger said. "Michael Dell has reached out to our major partners to assure them that VMware will continue to invest in its strong independent partner ecosystem."

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist.

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