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Software maker VMware to cut 800 jobs, sees weak 2016

Reuters

By Sai Sachin R

(Reuters) - VMware Inc forecast 2016 revenue and profit below analysts' expectations, citing weak bookings for its virtualization software in China, Russia and Brazil, and the company said it would cut about 800 jobs.

The company, whose parent EMC Corp is being acquired by Dell Inc [DI.UL], also appointed EMC Chief Financial Officer Zane Rowe its finance chief, replacing Jonathan Chadwick.

VMware shares fell 5 percent in extended trading on Tuesday, while EMC shares declined 1.4 percent.

VMware, a maker of software that helps customers cut costs by running multiple operating systems on a single machine, has been hurt by slowing economic growth in markets outside the United States, which account for nearly half of its revenue.

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The company forecast revenue of $6.79 billion-$6.94 billion and an adjusted profit of $4.07-$4.16 per share for 2016.

Analysts on average were expecting revenue of $7.21 billion and earnings of $4.20 per share, according to Thomson Reuters I/B/E/S.

VMware, which had nearly 19,200 employees at the end of 2015, said it would take a charge of $55 million-$65 million in the first half of this year related to the job cuts.

Rowe will take over as CFO on March 1. Chadwick, who is also VMware's chief operating officer, will quit the company.

EMC appointed its Chief Accounting Officer Denis Cashman its new CFO.

Dell plans to create a tracking stock for VMware to help finance the deal.

VMware's lackluster forecast overshadowed its strong fourth-quarter results.

The company's net income rose 14.4 percent to $373 million, or 88 cents per share, in the quarter ended Dec. 31, helped by a 12.6 percent jump in its services revenue.

Revenue increased 9.7 percent to $1.87 billion, topping the average analyst estimate of $1.85 billion.

Excluding items, VMware earned $1.26 per share, beating analysts' expectations by a cent.

The company's shares were trading at $46.25 after the bell. EMC shares were trading at $23.65.

(Reporting by Sai Sachin R in Bengaluru; Additional reporting by Sruthi Shankar in Bengaluru; Editing by Kirti Pandey)