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Nutanix Furloughs Are Not Layoffs, HCI Technology Vendor Says

Nutanix will furlough roughly 27 percent of employees for two weeks between now and October 31, 2020, the hyper-converged infrastructure (HCI) technology company has confirmed. The unpaid two-week furloughs are not to be confused with layoffs, a Nutanix spokesperson told the Silicon Valley Business Journal.

The furloughs are a precautionary move to ensure the enterprise HCI technology company remains healthy for the long-term, the report said. The furloughs will be staggered to ensure customer service levels remain strong, the company asserts.

Nutanix revenue as $346.8 million in the second quarter of fiscal 2020, up from $335.4 million in the second quarter of fiscal 2019, the company disclosed on February 26, 2020. The company had a net loss of $217.5 million in Q1 2020, larger than the $122.7 million net loss in Q1 2019.

The February 2020 earnings disclosure — based on a Q1 close of January 31, 2020 — was stronger than Wall Street’s expectations. However, a Q2 forecast at the time was weaker than analysts expected. The company’s stock is down more than 50 percent since that February 2020 earnings disclosure and forecast. Wall Street is particularly worried about the coronavirus pandemic’s potential revenue impact on the HCI company.

Nutanix: HCI Market Opportunity, Rivals and Challenges

Key Nutanix rivals include major enterprise IT hardware and software providers — particularly Dell Technologies and¬†VMware; HP Enterprise Simplivity; and Cisco HyperFlex. Still, Nutanix also partners with some enterprise hardware providers on the HCI front.

HCI converges storage, computing, and network resources for simplified deployment and management. The HCI market is expected to reach $33.16 billion by 2026, up from $3.84 billion in 2018, Allied Market Research predicts. That’s a compound annual growth rate of 30.7 percent.

Still, HCI providers face growing competition from such public cloud services providers (CSPs) as Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP).

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