A source close to VMware tells SDxCentral the layoffs are concentrated near the vSphere franchise rather than at newer product areas such as the NSX platform for network virtualization. The cuts are motivated partly out of concern that older businesses such as vSphere are no longer the innovation engines of the company and are running out of growth potential, the source said.
A VMware spokesman declined comment, saying the company doesn’t comment on rumors.
VMware employed roughly 18,000 as of December 2014, according to an SEC filing.
VMware seems to be under more scrutiny than usual while Dell is busy acquiring EMC, VMware’s parent company. VMware’s share price is a particularly sensitive subject, since the deal involves the creation of a VMware tracking stock, shares of which would be handed to EMC shareholders.
Dell would additionally pay roughly $24 in cash per EMC share. That happens to be the price that EMC shares are trading at right now, which led a USA Today columnist to argue that EMC’s investors are judging the VMware tracking stock to be worthless.
Fear of harming VMware’s share price was also a motivation behind moving Virtustream, the recently acquired cloud-hosting operation, under EMC’s wing. The original plan had Virtustream becoming a 50-50 joint venture between EMC and VMware.