Long time VMware employee here.

While this is of course a sad event, it is not a reflection on the strength/weakness of VMware. Actually for a lot of my time here, we've had "carte blanche" in terms of hiring. The challenge was finding enough qualified people. I do think with the recent slew of acquisitions, the company may have grown too much too fast and is needing to reorganize hence this announcement.

From what I heard, the company is still planning to grow its headcount in 2013 from where it is today. It is also engaged in a massive expansion project which will triple the size of the campus in Palo Alto. It would not be undertaking such a massive and costly effort if a permanent downsize is being envisaged.