Dive Brief:
- While announcing fourth-quarter earnings Tuesday, VMware confirmed it plans to cut 800 jobs by the end of March or mid-April. The cuts account for just under 5% of all employees, according to a report from the Silicon Valley Business Journal.
- VMware also announced that its CFO and COO, Jonathan Chadwick, is leaving the company.
- Though VMware’s quarterly earnings of $1.87 billion were above analyst expectations, the stock fell about 5% Tuesday.
Dive Insight:
While Dell and EMC are in the middle of a merger deal, VMware is caught firmly in the middle. EMC owns about 80% of VMware’s stock. Once the deal between Dell and EMC is complete, some speculate that Dell will sell VMware.The change at CFO adds further fuel to the speculation.
Last year, Dell agreed to purchase EMC for a record $67 million. The founder, Michael Dell, was looking to move away from the PC hardware market and into areas such as cloud computing, mobility and cybersecurity.
In a recent letter, Dell's founder, Michael Dell, extolled the acquisition and said the combination will create an “enterprise technology powerhouse.”
Dell’s letter worked to soothe investors at a time when people have raised concerns that Dell’s plan to take over EMC while taking on $40 billion in corporate debt may be in trouble. People are especially concerned with how both the shares of EMC and VMware have fallen, meaning the expected earnings and cash flow could be lower than when the deal was originally put together. There is a remote chance, Re/code reports, that Dell and the banks may decide not to move forward with the deal, especially considering the state of the debt market.
