VMware plans realignment, continues hiring freeze

Computerworld - VMware Inc. CEO Paul Maritz said last week that a hiring freeze that started in the third quarter will "continue into the fourth quarter, and frankly into 2009 as well."

During a conference call to discuss the company's third-quarter financial results, Maritz also unveiled plans to realign the business to ride out the current worldwide economic instability and to help transform VMware from a start-up to a mature software company.

The company had announced the hiring freeze -- or "pause," as Maritz called it -- in July. He said last week that it will help VMware "take stock and make sure we have people focused on the right areas."

Maritz said the realignment calls for dividing the company into business units based on product lines, each headed by a senior executive.

He wouldn't elaborate on the division plan, except to say that they will have separate research and development groups but will share a common sales and marketing operation.

"We're still working our way through the details; our intent is to have [the realignment] ready and implemented as we go into 2009," Maritz said.

The moves come despite solid third-quarter results -- revenue of $472 million, up 32% from the same period last year, and profits of $83.3 million, up from $64.7 million in 2007.

As for next year, Maritz said that "it's too soon to say what will happen in 2009" in terms of customer spending.

Meanwhile, VMware's majority owner, EMC Corp., reported that its third-quarter revenue grew 13% to $3.7 billion. EMC's profits for the quarter totaled $411 million, down from $493 million during the same period last year.

In a conference call after the results were released, EMC President and CEO Joe Tucci said that the stock-market meltdown and the weak credit market caused some big companies to postpone purchases in late September. Tucci added that he expects IT spending to grow between 1% and 3% in 2009.

EMC is forecasting fourth-quarter revenue of $4 billion, up from $3.8 billion last year.

James Niccolai and Stephen Lawson write for the IDG News Service.

This version of the story originally appeared in Computerworld's print edition.

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