VMware Realigns Businesses, Reports Record Profits

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Virtualization and cloud kingpin VMware on Monday said it is realigning its resources with plans to lay off about 900 employees in 2013 related to non-strategic assets while growing headcount for the year by 1,000 people thanks to investments in strategic business areas.

The company also reported record annual revenue and strong earnings for fiscal 2012 and said it expects significant growth in both revenue and earnings for 2013.

However, VMware's expected 2013 growth did not reach the expectations of investors who pummeled the company's share prices in after-hours trading.


[Related: Gelsinger Taking Over VMware As Storage, Virtualization Come To A Crossroads]

VMware CEO Pat Gelsinger said during the company's financial analyst call that VMware will be taking advantage of three growth patterns in 2013, including the rise of the software-defined data center, the increasing utilization of hybrid cloud computing and the growth of end-user computing.

"As we enter Q1, we are focusing our emphasis on these areas," Gelsinger said.

That is resulting in a two-tier realignment currently going on within the company, Gelsinger said.

The first is a restructuring of VMware's portfolio, which includes the movement of non-core cloud assets into the Pivotal Initiative, a new organization formed by the combination of VMware's non-core technology for building platform-as-a-service (PaaS) offerings with VMware parent company EMC's big data technology.

EMC and VMware plan to provide more details about the Pivotal Initiative at the two companies' Strategic Forum, slated to be held on March 13 in New York, Gelsinger said.

The second tier is a realignment of resources, which includes shifting the company's personnel into strategic areas while cutting personnel in less-strategic areas, he said.

"Our aspirational goal is to become the greatest infrastructure software company of this decade," he said.

The alignment has already started. The company in December formed the Network and Security Virtualization group to help drive demand for next-generation networking solutions as part of the software-defined network (SDN). Stephen Mullaney, the former CEO of SDN leader Nicira, which VMware acquired in 2012, was appointed vice president and general manager of that new organization.

Jonathan Chadwick, VMware CFO and executive vice president, said VMware will lay off about 900 people in 2013 as it moves away from certain products such as its SlideRocket presentation software, which customers see as non-strategic to their needs.

However, Chadwick said, the company expects headcount to increase by 1,000 people during the year, excluding the personnel moving to the Pivotal Initiative.

NEXT: Record Revenue, Strong Earnings

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