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January 29, 2013

VMware to slash 900 jobs over weak revenue growth

VMware reported a drop in contracts from the US federal government during 2012.

By CBR Staff Writer

Virtualisation and cloud infrastructure firm, VMware, is planning to slash 7% of its workforce.

The plan will involve shifting some employees to new roles, as part of its restructuring plan after reporting slow revenue growth.

During 2012, the firm reported a 22% rise in revenues to $4.61bn, while its operating income rose 19% to $872m during the year.

The firm is expecting its first quarter 2013 revenues to range between $1.170bn and $1.190bn, up 11 to 13%, from the corresponding quarter in 2012.

VMware chief executive officer Pat Gelsinger said that 2012 was a strong year for the company, with solid Q4 results despite a tough economic environment.

"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 virtualization technologies that radically simplify IT infrastructure from the data center to the virtual workspace," Gelsinger said.

The firm has revealed plans to focus on its most popular products and scale back in some areas of the business, emphasising mostly on certain geographies, product groups and operations.

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According to the firm, the business environment in the US has been hard, and it reported drop in contracts from the US federal government during the year.

The company has also been facing increasing challenges from other firms including Microsoft.

As part of the restructuring process the firm will shut some of its businesses and facilities.

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