VMware, Inc. (NYSE:VMW) is planning to lay off as many as 900 workers in the coming weeks as part of an ongoing restructuring plan. The cuts come on growing concerns over share declines as well as weaker bookings in the highly competitive software business. Concerns about parent company merging with Dell could also have played a role on the job cuts.
Growing Attrition Level
The job cuts represent 5% of the company’s total workforce that currently stands at 18,000. EMC Corporation (NYSE:EMC) is in the process of being acquired with Dell in a deal worth $67 billion. With the company holding a majority stakes in VMware there have been reports that such cuts would be inevitable as part of tabled cost cutting measures.
The targeted layoffs do not come as a surprise if the level of attrition at VMware, Inc. (NYSE:VMW) is anything to go by. According to reports, many staff have quit in the recent past especially high ranking sales people in the New York metro area. The company has been under pressure ever since Dell announced plans to acquire its parent company EMC.
Dell-EMC Merger Concerns
VMware shares have tumbled ever since Dell reiterated plans to convert the 80% EMC Corporation (NYSE:EMC) stakes in the company into tracking stock. Investors remain wary that the planned tracking stock deal won’t be enough in terms of market value going forward. New rising technologies of the likes of Dockers containers and Nutanixs have also continued to pound pressure on the company’s core business.
EMC is finding it difficult to convince VMware, Inc. (NYSE:VMW) investors why they need to swallow the proposed $67 billion merger with Dell. The fact that VMware shares have outperformed EMC shares all but continues to exacerbate the standoff.
Just like VMware, Inc. (NYSE:VMW), EMC, has already confirmed its own layoff plans ahead of the merger with Dell which it says will cost about $250 million. Dell says that its $67 billion deal makes a lot of sense as it will help boost revenue margins in the long run.
Anthony Young
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