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Slow growth sees job losses at VMware

30 Jan 2013

VMWare plans to cut around 900 jobs after reporting slowed revenue growth during 2012, reseting investor expectations in the process.

The virtualisation and cloud infrastructure provider made the announcement following the release of their financial results for the fourth quarter and full year of 2012.

Despite revenues for the fourth quarter reaching US$1.29 billion, an increase of 22% from the fourth quarter of 2011, the company struggled across the U.S. as a whole.

“2012 was a strong year for VMware, with solid Q4 results despite a tough economic environment,” says Pat Gelsinger, chief executive officer, VMware.

“We see a tremendous market opportunity in 2013 and beyond, as we focus on what our customers value most: VMware’s role as a pioneer of virtualisation technologies that radically simplify IT infrastructure from the data center to the virtual workspace.”

But such bullish analysis of the year did not wow investors, with shares dropping 15% to 83.55 during after hours trading, hitting a four-month low.

The company admitted a realignment plan was in place however, which will eliminate roughly 900 jobs from low-priority areas, with an estimated cost of between $70-$80m.

Yet VMware aims to boost its staff count by 1,000 by the end of 2013, as the company addresses new business priorities.

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