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VMware Freezes Salaries, Cuts Executive Pay

VMware is freezing employee salaries, cutting executive pay and suspending 401K retirement plan matching, Business Insider reports. Among the article takeaways:

  • A twice-per-year VMware bonus plan is now once-per-year.
  • Annual promotion reviews are postponed.
  • CEO Pat Gelsinger and top executives will take pay cuts in Q2 and Q3 of this fiscal year.

VMware on March 26  withdrew its Q1 and FY21 guidance, citing the coronavirus pandemic.

VMware Business Health, Evolution

The cloud and virtualization software company was solidly profitable and growing ahead of the coronavirus pandemic. Indeed, VMware disclosed in February 2020:

  • Revenue was $3.07 billion in Q4 2019, up 11 percent from Q4 of fiscal 2018.
  • GAAP net income was $321 million in Q4 2019, compared to $496 million in Q4 2018.
  • Cash was $2.91 billion, and unearned revenue was $9.27 billion, as of January 31, 2020.

VMware, publicly held and backed by Dell Technologies, has successfully extended its business from server virtualization to network, storage and overall software-defined data center (SDDC) capabilities. The company has also boosted its desktop as a service (DaaS),  and cybersecurity offerings -- including the Carbon Black endpoint security acquisition.

After abandoning a VMware-centric public cloud, the company has successfully built various services on third-party clouds. Noteworthy moves include the VMware Cloud on AWS strategy, which numerous public cloud MSPs now back.

Economic Slowdown Impacts Tech Sector

Like VMware, numerous technology companies are taking steps to cut costs and conserve cash. The obvious reason: Nobody knows quite how long the coronavirus pandemic will last, nor how deeply it will impact the overall world economy.

Other recent moves include hyper-converged infrastructure (HCI) infrastructure provider Nutanix confirming furloughs, and OpenText (owner of Carbonite and Webroot) cutting 5 percent of staff and temporarily reducing salaries until mid-2021.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.