Turmoil-Weary VMware Partners Hoping For Signs Of Stability Amid Dell-EMC Uncertainty

As VMware prepares to report fiscal fourth quarter earnings Tuesday, its channel partners are hoping for positive signs to counteract more than three months of turmoil and uncertainty over Dell's $67 billion bid to acquire EMC.

VMware shares are down nearly 40 percent since early October, when Dell and EMC revealed their intention to pull off the largest merger in tech industry history. EMC shares are down around 15 percent since then, and since last week, have been trading at less than the $24.05 cash price that Dell offered for EMC.

Meanwhile, the tracking stock linked to EMC's 81 percent ownership stake in VMware, which was valued at $9.10 per share after the Dell-EMC deal was announced, is "now valued at zero dollars a share, or essentially worthless," USA Today reported last week.

[Related: VMware Loses Former AWS Cloud Evangelist Brunozzi To Stealthy Silicon Valley Startup]

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Most VMware partners are still bullish on the vendor's technology and future prospects. But at least one told CRN that any further uncertainty around the Palo Alto, Calif.-based virtualization vendor's future would be a most unwelcome development.

"VMware's stock has been hammered since the last earnings call [in October], so they had better be prepared to address it somehow [during Tuesday's Q4 earnings]," said the VMware partner, who didn't want to be named.

Meanwhile, Fortune reported last week that VMware is set to lay off around 900 employees -- roughly 5 percent of its global workforce -- and that senior salespeople and sales managers would be impacted.

Sources told CRN on Monday that the layoffs are hitting VMware business units across the board and in all regions, and are focused on sales, sales operations and professional services functions.

VMware has also put most employee travel on hold, and some partners are finding it difficult to recoup market development funds, according to the sources.

Spokesmen from EMC and VMware declined to comment.

"It's tough when good people are leaving," said one longtime VMware partner executive with ties to employees who've departed, who didn't want to be named. "VMware is being cut to the bone now."

EMC and VMware have already seen a steady exodus of employees since the Dell-EMC deal came to light, including senior-level sales, marketing and technical staff. Some of these people have joined other enterprise vendors, while others have cast their lot with venture-backed startups.

The VMware partner executive told CRN he believes the situation at the virtualization vendor will soon stabilize, and that the worst of the turbulence triggered by the Dell-EMC deal is over.

"As tech people, we ask for disruption, in a way, in order to increase sales, expand product lines, etc.," said the executive. "But the effect of innovation and change is loss of people, and a delayed Wall Street reaction."