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VMware to cut 900 jobs ahead of merger

The $67 billion merger of Dell, EMC, and VMware is almost at its completion. However it looks as if VMware may be bearing the brunt of the deal. The company's stockholders are concerned about the acquisition of its parent company, EMC, as well as the recent declines in its shares.

It is speculated by sources close to VMware that the company will be laying off up to 900 people. This is about 5 per cent of its total workforce of 18,000 people worldwide. VMware is preparing to release its fourth quarter earnings on Tuesday (26 January) and more bad news for the company could lead to more layoffs.

EMC, the parent company of VMware, owns 80 per cent of the firm. In a similar move to VMware, EMC has already launched its own layoffs which will cost around $250 million. While the merger between Dell, EMC and VMware is in its final stages, Dell and EMC have faced difficulties getting VMware investors to accept the deal. RSA Security, VCE, Pivotal and VMware are all “EMC Federation” companies.

Some of those who oppose the merger to do so because they believe that Dell is acquiring VMware at an incredibly low price. This is because the company's stock has been able to outperform EMC shares. Investors are also worried that Dell may end up selling off VMware at a profit. This has lead to the shared belief that the VMware tracking stock, which was included in the deal, will not be enough to satisfy shareholders.

Large mergers and acquisitions take time and sacrifices often have to be made. If the companies involved are unable to hit profitability or revenue goals, costs will need to be cut. VMware laying of 900 people could just be the beginning when it comes to layoffs in the merger of EMC and Dell.

Image credit: Shutterstock / POSSOHH

Anthony Spadafora
After living and working in South Korea for seven years, Anthony now resides in Houston, Texas where he writes about a variety of technology topics for ITProPortal.