Over the last couple of months, there seems to have been a brain drain at VMware; executives are leaving in swarms. (Is that the collective noun for a group of execs? I don’t know.)
The past month has seen the departure of Jonathan Chadwick, the highly respected chief finance officer; Martin Casado, the general manager of the Networking and Security Business Unit and creator of NSX; and finally, last week, longtime Chief Operating Officer Carl Eschenbach.
After a week of rumors, VMware has finally unleashed the Reaper. Yesterday morning as of 9 am GMT, VMware has announced layoffs in multiple business units across the globe. I have heard that Burlington Canada Call Center has been closed in its entirety (98), although about 50% have been given the opportunity to work remotely. I am sure that this will not include any of the call center staff. Additional layoffs are reported to include approximately 40% of VMware Israel (80), as well as losses in vCloud Air and vCloud Gateway Services in Canada, and in EMEA (numbers unknown). The most surprising of all are the layoffs of all VMware Workstation and Fusion development staff (numbers unknown)—as that department is being outsourced to China—and the rumors of the VMware View group’s being closed down.
Expect to see layoffs soon, now that the new year has built up some steam.
In my final post of last year, I mentioned that one of the stories from 2015 to keep an eye on in 2016 is the Dell $67 billion merger or acquisition of EMC. There has been some chatter that EMC, VMware, and Dell have been struggling to get the merger across the goal line. I have heard of a couple of different reasons for this struggle. One is the extra funding for the $10 billion or more in capital gains taxes that Dell would need to cover. These taxes were originally to be covered by a tracking stock. This tracking stock was structured under a fundamental provision of the US tax code and was designed to represent the holdings of Dell as the parent company.
It has been an interesting time to be living in the IT world. The ripples and ructions caused by the Dell/EMC merger have quashed almost every other conversation. This is the biggest take-private merger transaction for a tech company ever, dwarfed only by the $106 billion Time Warner/AOL deal in 2006.
The announcements keep coming thick and fast from the behemoth that is EMC Federation, the seven-headed hydra beast. In a not too unexpected announcement, VMware is to pseudo–spin out its vCloud Air division and move it into Virtustream, the latest Federation member, which EMC bought earlier this year for $1.2 billion.
It has been no secret that EMC has been under some pressure from Elliott Management Corp., one of EMC’s investors, to do something to raise share prices. Rumors and speculation about what might be coming has been a topic of many different posts and articles over the last year or so, but now it has been confirmed that the deal is done. This deal will close in 2016, and EMC Chief Executive Officer Joe Tucci will finally get his opportunity to retire. For all practical purposes, this has been in the making for quite a while. There had been some speculation that some kind of announcement needed to occur by the earnings report.