Software maker VMware to cut 900 jobs, offers weak outlook

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Software maker VMware to cut 900 jobs, offers weak outlook. (Thinkstock) Software maker VMware to cut 900 jobs, offers weak outlook. (Thinkstock)
SummaryVMware shares fell 13 percent to $85.50 in after-hours trade.

Software maker VMware Inc said on Monday it was cutting 900 jobs as part of a restructuring plan, and it gave a disappointing outlook for 2013. Its shares fell 13 percent in after-hours trade.

VMware, a publicly traded division of data storage equipment maker EMC Corp, said in a filing that "to enable the company to focus its business on strategic areas" it planned "to streamline its operations."

VMware did not elaborate in the filing but said it expected to complete the move by the end of the year and that it would take a charge of $90 million to $110 million.

The company, which also reported solid fourth-quarter earnings on Monday, offered an outlook for 2013 that did not meet expectations.

It said it expects revenue of $1.17 billion to $1.19 billion for the first quarter, an increase of 11 percent to 13 percent but short of the $1.25 billion estimated by analysts on average.

For the full year it forecast revenue of $5.23 billion to $5.35 billion, lower than estimates of $5.42 billion.

"They delivered a strong quarter but investor eyes are focused on the outlook," said FBR analyst Daniel Ives.

He added that VMware tended to be conservative in its guidance.

But Mizuho Securities analyst Abhey Lamba said that "management's 1Q13 outlook is significantly below normal seasonality, which could raise doubts about the company's longer term growth potential".

Revenue was $1.29 billion, sightly above average analyst expectations of $1.28 billion.

VMware shares fell 13 percent to $85.50 in after-hours trade, after closing at $98.32 on the New York Stock Exchange

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