What you need to know about VMware's and Dell's layoffs

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What you need to know about VMware's and Dell's layoffs

Within just two weeks of each other, Dell Technologies and VMware have each confirmed new rounds of layoffs.

VMware told CRN USA Wednesday that it was laying off an undisclosed number of employees this month. “We can confirm that there have been a limited number of changes to our workforce this month,” said VMware in a statement to CRN USA.

On 30 July, Dell Technologies, which owns an 81 percent majority stake in VMware, also confirmed it is laying off an unspecified number of employees. “Like all businesses right now, we’re taking a number of proactive steps to prepare for the uncertainties presented by COVID-19,” Dell said in a statement to CRN USA.

Here are the five biggest things to know about VMware and Dell Technologies recent layoffs, salary freezes and top channel executive departures.

Second round of VMware layoffs in 2020

VMware confirmed Wednesday it was laying off some employees this month but provided no details on the number of people, business units or geographies affected.

“We can confirm that there have been a limited number of changes to our workforce this month,” said VMware in a statement to CRN USA. “This is part of a regular workforce rebalancing as we realign resources and investments to opportunities at scale.”

However, this marks the second time VMware has conducted layoffs in 2020.

In January, VMware confirmed to CRN USA that the virtualization superstar was laying off an unspecified number of employees as part of its “workforce rebalancing” aimed at ensuring resources across its global businesses and geographies were aligned to customers and objectives.

VMware has approximately 31,000 employees across the globe.

Dell Technologies layoffs not related to COVID-19

Less than two weeks ago, Dell Technologies—which owns an 81 percent stake in VMware following its US$67 billion acquisition of EMC in 2016—confirmed it was laying off an unspecified number of employees.

It is key to note that the US$91 billion infrastructure giant specifically said the layoffs were not related to the coronavirus pandemic.

“Like all businesses right now, we’re taking a number of proactive steps to prepare for the uncertainties presented by COVID-19. We recently made some workforce reductions that reflect decisions made in early 2020 as part of regular evaluations of our business structure, and weren’t related to the pandemic,” said Dell in a statement emailed to CRN USA.

Dell has around 165,000 employees on a global basis.

VMware and Dell have implemented pay freezes

In May, VMware and Dell Technologies each confirmed they each have implemented companywide pay freezes due to the economic uncertainties stemming from the coronavirus pandemic.

Dell temporarily halted employee pay raises, contributions to 401 (k) retirement plans and hiring throughout the company.

“Like all businesses right now, we’re constantly evaluating our business to plan for resiliency in the current environment and to support our team members, customers and community in a way that sets us all up for success on the other side of this pandemic,” said Dell in a statement to CRN USA in May.

Shortly after the Dell announcement, VMware unveiled that it too has implemented a “number of cost management changes” after an internal memo surfaced stating that the company is conducting a companywide employee salary freeze as well as temporary salary reductions for top executives, including CEO Pat Gelsinger.

In an interview with CRN, VMware’s Sanjay Poonen said the company’s decision was “prudent” and won’t last forever.

“We want VMware to be the best place to work in. So while we had to announce those COVID-19 measures, they’re not forever,” said Poonen, chief operating officer at VMware. “We’ll examine them quarter by quarter, but we’re doing even more to invest in our employees.”

Channel leaders Flinders, Mullen and Toldo

Dell Technologies and VMware have two of the largest channel partner communities in the world. Shockingly, both companies’ global channel leaders have, or will soon, be heading for the door.

After 21 years at Dell Technologies, Joyce Mullen’s last day with the company is Aug. 14. Mullen is responsible for Dell’s global channel strategy, partner program, solution provider enablement and nearly $50 billion channel sales execution as president of global channel, embedded and edge solutions. Dell is currently searching for a replacement.

VMware’s global channel leader, Jenni Flinders, unexpectedly and quietly left the company in June after two years of leading VMware’s restructured channel charge. Flinders created VMware Master Services Competencies and completely overhauled VMware’s entire partner program with the launch of Partner Connect on March 1. Flinders was replaced by former longtime Cisco veteran Sandy Hogan.

In addition, VMware confirmed to CRN Wednesday that Shawn Toldo, vice president of VMware’s Worldwide Partner Organization, was let go as part of VMware’s round of layoffs this month.

Dell’s plan to spin off VMware stake

Dell Technologies confirmed last month that it is in the early stages of exploring a “spin-off” of its 81 percent stake in VMware. However, CRN USA has discovered that Dell is looking to sell its stake of VMware to current Dell Technologies shareholders.

Dell Technologies founder and CEO and Michael Dell and private equity partner Silver Lake are looking into retaining a controlling stake in VMware. If all goes accordingly, Dell will spin off its 81 percent stake in VMware to Dell shareholders sometime late next year, with Michael Dell—who is also chairman of VMware—and Silver Lake retaining an approximate 53 percent majority stake in VMWare.

If the spin-off is completed, Michael Dell will own approximately 42 percent of VMware, while Silver Lake will hold about 11 percent, sources said.

Michael Dell currently owns 52 percent of Dell Technologies while Silver Lake owns nearly 14 percent, according to a Dell Technologies Proxy filing in May with the U.S. Securities and Exchange Commission.

By spinning off its 81 percent stake in VMware to Dell Technologies shareholders, Dell Technologies will be able to improve its investment grade rating, pay down its US$48 billion in debt, keep its highly successful partnership with VMware intact, attract new investors and clean up its capital structure, sources and analysts said.

This article originally appeared at crn.com

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