Palo Alto, Calif.-based VMware has recently confirmed that it has taken several cost-cutting measures affecting its workforce amid the coronavirus pandemic.
According to an internal memo, the company said it is conducting a company-wide employee salary freeze as well as temporary salary reductions for top executives, including CEO Pat Gelsinger, due to the uncertainty of the coronavirus pandemic.
The memo was first reported by Business Insider, saying that the virtualization superstar is also halting 401K matches and switching from a semi-annual to an annual bonus plan for its approximately 31,000 employees. According to the news website, the memo was signed by VMware Chief Financial Officer Zane Rowe and Chief People Officer Betsy Sutter.
“The global economy is facing serious challenges brought on by the Covid-19 pandemic, and the overall economic outlook remains uncertain,” read the memo.
It further added, “Many of our customers are under financial pressure. …They remain cautious in their short- and mid-term investment plans, and that means VMware must also be thoughtful and prudent as we navigate the next several quarters.”
The development was later on confirmed by the company to media company CRN saying, “We can confirm that there have been a number of cost management changes impacting the VMware workforce. This is a part of a thoughtful and prudent plan designed to address the current uncertainty of the COVID-19 pandemic and the overall economic outlook while ensuring the company has the skills and talent needed to accelerate growth as the economy stabilizes.”
VMware is 81%-owned by Dell Technologies (DELL). It’s an industry leader in virtual machines for data-center servers and computer desktops.
Virtualization allows businesses to access disparate computer systems as one network. VMWare “dominates the maturing data center server virtualization market,” Morningstar analyst Mark Cash wrote in a February report.
In March, both VMware and Dell Technologies, pulled their fiscal year 2021 financial guidance because of the economic uncertainty stemming from the coronavirus pandemic.
“VMware is unable to predict the extent to which the global COVID-19 pandemic may adversely impact its business operations, financial performance and results of operations,” said VMware a March filing to the U.S. Securities and Exchange Commission.
Both Dell and VMware did not provide new full year guidance numbers. The two companies said they will provide more information during their upcoming quarterly earnings report later this month.
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