The company expects 2016 will be a key transition year as “we expect the effect of our new products to outweigh the decline in our compute products,” CEO Pat Gelsinger said on its latest earnings conference call.
The company has been facing challenges in its software business as its customers are increasingly using public cloud providers like Amazon Web Services and Microsoft Azure.
“Public cloud providers do provide VMware, but for many of the newer, cloud workloads, many are opting for containers or even OpenStack which doesn’t require what’s considered expensive VMware licenses,” wrote Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, in an email.
VMware reported that its total revenue under generally accepted accounting principles (GAAP) for 2015 was $6.57 billion, an increase of 9 percent from 2014, or up 12 percent year-over-year on a constant currency basis. The company expects 2016 revenue will be up to $6.935 billion, an increase of as much as 4 percent from 2015.
The guidance was influenced by concern about business from weakening economies like Russia, Brazil and China.
Gelsinger said during the conference call that the company recognizes that its blockbuster compute products are reaching maturity, and will play a decreasing role in the business. But the company expects newer emerging products will pick up the slack.
One of the company’s new focus areas is on extending customers’ private cloud workloads into the public cloud via vCloud Air Network and vCloud Air. But Gelsinger clarified that its vCloud Air cloud computing service will have a narrower focus, providing specialized cloud software and services distinct from other public cloud providers, suggesting that the company does not want to take the big players head-on in the commodity cloud business.
His comments came as SoftBank, which owns more than 70% of Sprint, reported its quarterly earnings.
“Sprint is now in the position to increase the pace of user acquisition while cutting costs,” Son said, according to Bloomberg and other news sources. “We will also cut staff. The cuts will be in the thousands.”
Son’s comments are not out of line with things Sprint CEO Marcelo Claure has been telling Sprint workers for months.
On Tuesday, Sprint’s stock price sagged downward after an earnings report included a statement saying that the carrier plans to cut $2 billion or more in operating expenses for its 2016 fiscal year, which begins in April.
Son also said the $2 billion is a “minimum target” and should be the amount slashed annually, according to a report by The Wall Street Journal. The company now has more than $25 billion in annual costs.
Sprint has been investing in attracting new customers — an effort that has been costly but effective. On Tuesday, Sprint reported it gained 237,000 postpaid phone customers in its second fiscal quarter, which ended Sept. 30. It was the first time the company had showed gains on that measure in two years. It also reported its lowest customer cancellation rate in company history.
In November 2014, Sprint had said it would cut 2,000 jobs as part of $1.5 billion in cost reductions. That announcement came after Sprint had cut 5,000 jobs from January through September 2014. The company had 31,000 workers at the start of its current fiscal year on April 1.
That automation will replace jobs is a workforce reality. For instance, in 1949 there were 182,500 people employed as telephone operators. It was the peak year. But by last year the number of operators employed by wired carriers had declined to 2,170, according to federal labor data.
Something similar is on the verge of taking place in back-office IT services jobs, due to automation improvements, with dramatic job cutbacks being forecast, according to a survey done of representatives from about 170 global sourcing firms. This includes the IT services industry.
Nearly a third of those surveyed said they expect job cuts of 25% or higher of their current workforces by 2020, according to a conference poll by the Information Services Group (ISG), a research and advisory services firm.
In this survey, 23% predicted workforce cuts of 15% to 25%, and some 28% said the cuts would range from 5% to 15%. Only 5% of respondents said current employment levels will grow.
Rob Brindley, a director at ISG, said improvements in automation, as well as continuing improvements in the capabilities of people, are bringing higher reliability and stability to IT systems, reducing calls for support. “Automation is going to be working be working in the background, evaluating events and incidents and resolving them before there is a customer impact,” said Brindley.
There also tools being developed, such as IPsoft’s Amelia cognitive engine, that an also be used to either augment or replace workers as time goes on.
In a 1955 Congressional hearing on “Automation and Technological Change” lawmakers and experts discussed the impact of automation on the workforce, and the decline of some types of jobs.
“I see only benefits in the long run,” said Dr. Vannevar Bush, president of the Carnegie Institution, regarding automation.
Taiwanese smartphone maker HTC Corp said it will eliminate some jobs and discontinue models as part of its strategy to focus on high-end devices to better compete with the likes of AppleInc and Samsung Electronics.
“The cuts will be across the board,” Chief Financial Officer Chialin Chang told reporters after HTC reported a second-quarter loss and forecast another for the third-quarter. “They will be significant.”
Chang said the cost reductions would extend to the first quarter of next year, but declined to give further details.
A pioneer in early smartphones, HTC has been dismissed by industry watchers as confused, unoriginal and uncompetitive.
The company has been losing market share over the past few years, hit by intense competition at the high-end of the market from the likes of Apple and Samsung Electronics while budget Chinese rivals have also eclipsed its low-cost offerings.
HTC shares have fallen 51 percent so far this year. The stock closed 1.69 percent lower before the results were announced.
Chang said HTC was banking on selling high-end models in emerging smartphone markets such as India, where he said the company has a 20 percent market share of phones priced between $250-$400.
Analysts, however, are less optimistic, saying HTC is likely to continue to struggle for the next four quarters at least.
“We believe HTC will keep losing share in the smartphone market and will keep losing money,” analyst Calvin Huang with Taiwan’s SinoPac Securities wrote in a recent research note.
Finland’s Rovio said on Monday it had inked a deal with Danish toymaker Lego to produce a line of Angry Birds building blocks as a bid to revive its ailing licensing business based on the popular mobile game.
Rovio, whose 2014 earnings fell 73 percent due to a drop in licensing the Angry Birds brand on toys, clothing and sweets, said the release of the Lego toys would coincide with the premiere of its full-length Angry Birds movie in spring 2016.
The Angry Birds game, in which players use a slingshot to attack pigs who steal birds’ eggs, is the No. 1 paid mobile app of all time, but the brand has been losing appeal and Rovio has struggled to produce new hit games.
The company is hoping the upcoming 3D movie will help the toy business turn back to growth.
Rovio recently cut about 110 jobs, or 14 percent of its workforce.
Sony Corp hopes to increase operating profit 25-fold within three years by growing its camera sensors and PlayStation units, its chief executive said, laying out a strategy that could see the company exit the ultra competitive TV and smartphone markets.
CEO Kazuo Hirai said on Wednesday the Japanese consumer electronics firm would no longer pursue sales growth in areas such as smartphones where its has suffered competition from cheaper Asian rivals as well as industry leaders like Apple Inc and Samsung Electronics.
Sony would instead focus its spending on more profitable businesses such as camera sensors, videogames and entertainment as it seeks to return to growth after forecasting for this financial year its sixth net loss in seven years.
“The strategy starting from the next business year will be about generating profit and investing for growth,” Hirai told a briefing, adding that Sony’s units would be given greater autonomy to make their own business decisions.
Asked about the TV and mobile phone units, Hirai said he would not “rule out considering an exit strategy”, Sony’s clearest statement to date about the possibility of selling or finding partners for these struggling units.
Sony is in the midst of a restructuring that has so far seen it sell off its personal computer division and spin off the TV business. It has also axed thousands of jobs.
Sony shares have risen more than 80 percent over the past year as investors applauded the restructuring, which accelerated since Hirai appointed Kenichiro Yoshida as his chief strategy officer in late 2013.
Blizzard is happy and why shouldn’t they be as World of Warcraft subscriptions are up. The reason for the increase can be traced to the release of the latest expansion pack which was recently released. The latest WOW expansion pack is called Warlords of Draeno and its release has driven subscriptions to 10 million.
Selling over 3.3 million copies of the Warlords of Draenor on the first day alone, growth has been seen in all major territories since release. The numbers do include those players that are using the 1 month free subscription that comes with the expansion pack. WoW subscriptions had climbed to 7.4 million last quarter after being down.
Of course the release of Warlords of Draenor has not been without its problems. Still Blizzard says that they are working around the clock to address them. Owners have been offered free play time as compensation.
Samsung Electronics Co Ltd said that it will discontinue its light emitting diode (LED) lighting business outside of South Korea, scaling back what was identified as a key growth business just four years ago.
The pullback comes on the heels of Dutch rival Philips recent decision to spin off its century-old lighting business. Price wars have slashed profitability to levels deemed too unattractive in the long run, despite an LED boom that has upended the global incandescent lighting industry.
Analysts say Samsung Electronics’ retreat reflects the growing competition from Chinese manufacturers even as demand for LED lighting remains strong. LED lamps last 10 times longer than fluorescent bulbs and 100 times longer than traditional incandescent tungsten filament bulbs.
“It appears that Samsung decided to fold the business because price competition was so fierce and there was not a lot of room for growth going forward,” said Seoul-based IM Investment analyst Lee Min-hee.
Philips said in September that it will spin off its lighting business to expand its higher-margin healthcare and consumer divisions. Two month earlier, Germany’s Osram Licht AG, which also makes LED lights, announced a cost-cutting plan that included nearly 8,000 job cuts.
A spokeswoman at Samsung Electronics said revenue contribution from the business was small but did not comment on specifics, including how much Samsung had invested.
“We will remain active in the LED industry through our LED component business,” Samsung Electronics said in an emailed statement, adding that it will focus on areas such as backlighting for displays of consumer products like televisions.
“We have been building our team on assumptions of faster growth than have materialized. As a result, we announced today that we plan to simplify our organization … we also need to consider possible employee reductions,” Chief Executive Mikael Hed said in a statement.
According to Rovio, the Angry Birds game, in which players use a slingshot to attack pigs who steal birds’ eggs, is the No. 1 paid mobile application of all time.
Rovio has expanded the brand into an animated TV series and merchandising of toys and clothing, but at the same time it has struggled to retain players, resulting to its earnings halving last year.
In August, the company named Pekka Rantala, a former Nokia executive, as its next CEO.
Microsoft Corp is said to be planning its biggest round of job cuts in five years as the software giant moves to integrate Nokia Oyj’s handset unit, Bloomberg reported, citing people with knowledge of the company’s plans.
The reductions, expected to be announced as soon as this week, could be in the Nokia unit and the parts of Microsoft that overlap with that business, as well as in marketing and engineering, Bloomberg reported.
Since absorbing the handset business of Nokia this spring, Microsoft has 127,000 employees, far more than rivals Apple Inc and Google Inc. Wall Street is expecting Chief Executive Satya Nadella to make some cuts, which would represent Microsoft’s first major layoffs since 2009.
The restructuring may end up being the biggest in Microsoft history, topping the 5,800 jobs cut in 2009, the report said.
Some of the job cuts will be in marketing departments for businesses such as the global Xbox team, and among software testers, while other job cuts may result from changes Nadella is making to the engineering organization, Bloomberg reported.
Last week, Nadella circulated a memo to employees promising to “flatten the organization and develop leaner business processes” but deferred any comment on widely expected job cuts at the software company.
Nadella said he would address detailed organizational and financial issues for the company’s new financial year, which started at the beginning of this month, when Microsoft reports quarterly results on July 22.
HP plans to axe more than 1,100 jobs at three of its UK sites in 2014, the Unite union announced on Wednesday.
The 1,124 job cuts will take place across three of HP’s UK workplaces, in Bracknell, Sheffield and Warrington. A total of 618 jobs could be lost at the Bracknell hub, 483 will go at Warrington, and 23 at Sheffield.
However, Unite said that many of these job cuts will affect HP employees who work from home, although we’re not sure that makes the situtation better.
Unite national officer Ian Tonks said, “For the last five years HP has been addicted to a culture of job cuts in the UK to such an extent that its highly skilled workforce has little faith in the way the company is being managed and will be going forward.
“Unite will be doing everything possible to mitigate these job losses which are a hammer blow to the UK’s IT sector and very distressing for employees in the run-up to Christmas.”
The reason for the job cuts is still not entirely clear. HP cited “reorganisation” and “falling demand”, despite being one of the only PC makers in the third quarter to show sales growth, while rivals Acer and Asus posted massive declines in PC shipments.
Tonks continued to condemn the job cuts, adding, “At the recent re-negotiation of the European works council (EWC), senior European managers were unable to answer any questions about the future EWC, as they could not get hold of their American bosses because of last week’s Thanksgiving holiday. It’s no wonder there is so little faith in the European management.”
HP has yet to announce when the job cuts will commence, but reports claim they will begin in early 2014.
A HP spokesperson said in a statement, “HP commenced consultation for Q1 FY14 on November 28th, 2013 in the UK regarding potential workforce changes for 2014.
“The proposed UK workforce management plan is part of HP’s global multi-year productivity initiative that was announced on May 23, 2012, and updated at its Securities Analysts Meeting on October 9, 2013, to address current market and business pressures in support of HP’s turnaround in EMEA.
“HP remains committed to supporting the employability of its employees through a number of internal initiatives, including re-skilling, redeployment and support to obtain alternative employment as appropriate.”
The move is meant to “streamline and optimize” the company’s U.S. organization “after several years of aggressive growth,” HTC said in a Monday email. A company spokeswoman declined to specify how many employees would be affected.
“However, to achieve our long-term goals as a business and return maximum value to our shareholders, this is a necessary step to drive ongoing innovation,” the company said.
HTC has been facing a difficult year on weak earnings that have sent its stock price tumbling. In the second quarter, its net profit plummeted 83 percent year-over-year, despite strong reviews for its flagship smartphone, the HTC One.
The weak financials are major change from only a couple years ago when HTC was riding high selling Android smartphones in the U.S. But starting in late 2011, the company’s net profit has sagged on increased competition from Samsung and Apple.
To recover, HTC has focused on building up its “One” smartphone brand. In addition, the company has expanded its China presence, and in August launched a new marketing campaign that’s enlisted Hollywood actor Robert Downey Jr.
While the company has largely focused selling high-end handsets, in July HTC said it was planning on selling more mid-tier and entry level phones to regain market share. The new phones will launch at end of the third quarter or early fourth quarter.
But the company’s troubles go beyond issues with smartphone sales and marketing. In September, Taiwanese authorities arrested three HTC employees for allegedly stealing company secrets. One of the employees arrested was Thomas Chien, HTC’s vice president of product design.
HTC has declined to offer further details on the case.
The layoffs are part of rolling job cuts that have been ongoing for several weeks, the people told the paper.
“I can confirm a small number of employees were laid off today,” a company spokesman told the newspaper, without providing additional details.
BlackBerry, which has bled market share to rivals including Apple’s iPhone and phones using Google’s Android technology, said last month it was weighing its options, which could include an outright sale.
News of the layoffs was first reported by Canadian technology blog Cantech Letter.
BlackBerry could not immediately be reached for comment outside of regular U.S.business hours.
IBM’s CEO Virginia Rometty has taken to her web cam to blast her be-suited staff who are “too slow.” Rometty sent off a five-minute internal video message which was so grumpy they did her the favour of sending it to the Wall Street Journal. She moaned at the company’s sales staff for failing to get ink on the page for a number of potential deals.
“As the quarter ended, hundreds of millions of dollars of software and mainframe opportunities, they didn’t close and that was because we didn’t move fast enough,” she snarled.
Rometty said that in at least one case IBM was too slow to understand the value and then engage on the approval and the sign-off process and it didn’t get done. If a client were to have any requests or questions in the future, IBM had better have a response ready within a day.
“And if anything slows you down, call it out. Engage management, engage leadership and let’s deal with it,” she growled. She has already given her “under-performing” storage crew a dressing down and said she will be taking “substantial actions” to sort out that area of its business and Rometty has also switched the head of corporate strategy with the head of systems and technology in a bid to shake things up.
But on the plus side, she confessed that her strategy was “the right one” and “fundamentals are strong”. So in other words she is right and those lazy suits are wrong. Big Blue missed its first quarter targets after expected income from mainframe systems and related software deals, along with patent licences, had to be rolled over into the second quarter.
IBM, a bellwether for the IT industry, is in the midst of a drive to boost profits by 2015 against an uncertain global economic backdrop.
Local management has yet to officially outline whether there will be a formal job-cuts plan approved by U.S. headquarters, the union representatives said, but said the numbers had already been communicated.
“Management is set to present a plan to cut between 1,200 and 1,400 staff over the next two years,” said Pierry Poquet, secretary general of the UNSA union, who said a meeting was planned for April 25.
“For now it is only a target…we’ve heard such announcements before but they don’t always come to pass.”
The CFE-CGC union’s representative, Evelyne Heurtaux, confirmed the figures. “We’ve been told a figure of around 1,300 jobs cut over two years,” she said.
IBM currently employs around 8,000 people in France, Heurtaux said.
An IBM spokeswoman could not be reached for comment.