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   Technology StocksVMware, Inc. (VMW)


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To: Glenn Petersen who wrote (297)10/21/2015 11:52:09 AM
From: Glenn Petersen
   of 345
 
VMW is taking a beating this morning:

VMware Declines on Analysts' Rating Downgrades, Weak Bookings

Lily Katz
BloombergBusiness
October 21, 2015 — 9:43 AM CDT

VMware Inc., a maker of software used to consolidate applications on corporate servers, fell the most in more than 2 1/2 years after at least 10 analysts downgraded the shares.

The company posted third-quarter profit yesterday that topped estimates, underscoring its status as a key asset in the sale of parent company EMC Corp. to Dell Inc., yet weak bookings -- a measure of future revenue -- added to anxiety among shareholders about the software maker’s independent business model.

VMware slid 18 percent to $56.48 at 10:41 a.m. in New York trading, and dropped as low as $56.18, the biggest intraday decline since January 2013. The shares had lost 17 percent this year through Tuesday.

Analysts at Pacific Crest Securities cut their rating on VMware to the equivalent of neutral, citing weak billings that resulted from customer uncertainty and weakness in large global economies. Daniel Ives, an analyst at FBR & Co., said the past week or so has been like “A Nightmare on Elm Street” for VMware shareholders, with the EMC-Dell deal putting pressure on the stock.

VMware said its bookings rose 3 percent. Analysts had anticipated an 11 percent gain, said Abhey Lamba, an analyst at Mizuho Securities USA Inc.

bloomberg.com

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From: Glenn Petersen1/23/2016 3:18:31 PM
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VMware Insiders Brace for Big Cuts

by Barb Darrow
Fortune
January 22, 2016, 1:57 PM EST



Pat Gelsinger, CEO of VMware, in 2011. Photograph by Ronda Churchill — Bloomberg/Getty Images
_____________________________________

Layoffs are already happening within the EMC Federation.

As EMC, VMware, and Dell struggle to pull their $67 billion merger across the goal line, look for big cuts to come at VMware.

Sources close to the server virtualization giant said the company will lay off up to 900 people, or about 5% of its global head count, next week. VMware’s VMW -0.16% fourth quarter earnings will be released Tuesday, January 26. According to its corporate facts page, Palo Alto, Calif.-based VMware employs about 18,000 people worldwide.

A VMware spokesman had no comment for this story. But cuts would not be unexpected. EMC EMC 1.96% , which owns about 80% of VMware, has already launched layoffs, which will cost about $250 million.

These changes emanate from the difficulty Dell and EMC have had getting investors, especially VMware investors, to swallow this deal. VMware is one of several “EMC Federation” companies, including RSA Security, VCE, and Pivotal. Cynics said that by buying EMC, Michael Dell is getting VMware at a bargain basement price, since VMware stock has outperformed EMC shares. Then, their thinking goes, he will turn around and sell off VMware at a profit, a scenario that left current VMware shareholders feeling ill used.

And hence the growing perception that the VMware tracking stock, planned as part of this deal, won’t be worth enough to make shareholders whole.

EMC and its federation companies have made moves to placate that constituency. EMC and VMware, for example, have already gone back to the drawing board with VMware chief executive Pat Gelsinger and EMC boss Joe Tucci, reversing plans to move VMware’s vCloud Air business into EMC’s Virtustream unit.

Not only that, EMC pulled VCE back into the mother ship earlier this month, naming Chad Sakac, head of EMC’s global systems engineering group, to replace VCE president Praveen Akkiraju, while retaining his current title. That move was reportedly accompanied by layoffs at VCE, which is now a business unit of EMC as opposed to a full sort-of-independent member of the EMC Federation.

The closing of big mergers and acquisitions is typically conditioned on the target companies hitting revenue or profitability goals. If sales aren’t flowing nicely, the only way to meet those goals would be cut costs. And that may be just what we’re seeing here.

Other sources close to VMware could not confirm the 900 number, but said VMware has been shedding jobs through attrition and targeted layoffs already. Several high-ranking sales people in the New York metro area, for example are gone. Ditto some global sales managers.

What is that curse about living in interesting times?

fortune.com

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From: Glenn Petersen1/26/2016 3:57:11 PM
   of 345
 
VMW reports after the close. A preview:

VMware Earnings Preview: Shareholders Uneasy Despite Expected Growth

Trefis Team, Contributor
Forbes
Jan 25, 2016 @ 01:56 PM

VMware is scheduled to announce its fourth quarter and full year earnings on Tuesday, January 26. At the beginning of Q4, tech giant Dell announced that it would acquire VMware’s majority owner EMC in a $67 billion acquisition. Dell management intended to keep VMware a publicly traded company, retaining an approximately 28% stake in VMware. VMware’s shareholders have reacted negatively to both the acquisition news, the introduction of a tracking stock related to VMware, and future plans by EMC that included a capital-intensive joint venture Virtustream with VMware. Consequently, VMware’s stock plummeted by about 30% through the quarter to about $55 by the end of December. Despite pressure from shareholders and investors, the company has continued to enhance its product offerings across end-user computing, mobility management and hybrid cloud domains.

We currently have a $86 price estimate for VMware’s stock, which is significantly higher than the current market price.

Is Dell/EMC Hindering VMware’s Growth?

Before Dell made the announcement, EMC had an 80% stake in VMware and 97% of voting rights. With Dell acquiring EMC, it has effectively taken the 97% voting rights but floated over 50% of VMware’s stock as tracking stock with no voting rights. Under the conditions of the deal, Dell would have a 28% stake in VMware with 97% voting rights, while existing VMware shareholders retain the 20% ownership with 3% voting rights, and over 50% ownership lies with former EMC shareholders in the form of tracking stock with no voting rights. Not only has the introduction of the tracking stock increased VMware’s float and depressed the valuation, shareholders are bound to be unhappy in a scenario where 97% of the voting rights lie with a party that has only a 28% economic interest in the company.

Network Virtualization, End-User Computing To Sustain Growth

VMware has seen a sustained period of strong customer response for the its software-defined networking platform NSX, its end-user computing product license sales and hybrid cloud computing offerings. The total number of paying customers for VMware’s NSX rose to over 900 by the end of Q3, up from 400 at the end of December and only about 150 at the end of June last year. Six out of VMware’s ten largest deals in Q3 included the NSX implementation, while the company also released the NSX 6.2 during the September quarter, which contributed significantly to the 100% annual rise in revenue generated through license bookings during the quarter.

The solid demand for NSX and software-defined networking likely continued through Q4, and is likely to continue to boost top line figures in the coming quarters. According to the company’s estimates, the number of production customers that are currently using NSX is far greater than the number of customers using similar products of any competing provider. Many of VMware’s customers continue to upgrade their networking and security requirements owing to the hardware-bound limitations in their current architectures. On the other hand, non-IT small and medium enterprises are likely to migrate to a newer technology once it fully matures. Accordingly, VMware could witness an increasing mix of large-scale license agreements and implementations in the coming years.

During the quarter, VMware announced the general availability of new hybrid networking capabilities including VMware Hybrid Cloud manager and Advanced Networking Services. Moreover, the company announced enhancements in the public cloud space for its Unified Hybrid Cloud platform at VMworld conference early in Q4. The product enhancement included the general availability for Google Cloud DNS and vCloud Air on a single platform and additional support for vSphere Integrated Containers on vCloud Air.

The other key area of growth for VMware has been end-user computing and mobile device management, which was boosted by the $1.5 billion Airwatch acquisition in January last year. The company has since witnessed strong demand for mobility solutions, as evidenced by 50-60% year-over-year growth in end-user computing license bookings through 2014 and in Q1’15. VMware witnessed a 30% year-over-year increase in license bookings for AirWatch in the June quarter, which further slowed to about 15% in Q3. The growth rate was lower in Q2 and Q3 mainly due to tougher year-over-year comparisons. The company has sustained growth in this domain and was recently recognized by IDC as a clear leader in enterprise mobility management domain.

Despite the massive drop in VMware’s market price through Q4, the company is likely to sustain growth for the quarter. The company expects Q4 revenues to be over $1.85 billion, which is a 9% year-over-year increase. Growth could be even higher in constant currency terms. VMware’s services revenue stream is likely to continue to witness a higher growth rate than the revenues generated through license bookings. The company has given guidance for license booking revenues to rise by 4-5% on a year-over-year basis to about $815 million, while services revenues could rise by over 10%.

forbes.com

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From: more1001/27/2016 9:28:13 AM
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VMWare (VMW) reported better than expected fourth quarter results but issued weak guidance for 2016. The company also announced a restructuring initiative that includes the elimination of 800 jobs. The company also said its CFO Jonathan Chadwick has decided to quit and Zane Rowe will assume the role on March 1st, 2016.

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From: more1003/9/2016 3:27:27 AM
   of 345
 
Both bearish candle and bearish CW suggest price in a trouble with a possible downside target $44

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From: Glenn Petersen7/21/2016 4:36:38 PM
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VMware's Beat And Raise Ease Worries Over Management Changes

REINHARDT KRAUSE
IBD
7/19/2016

VMware
( VMW) stock jumped Tuesday as a beat-and-raise quarter eased worries over management changes, amid parent EMC's ( EMC) sale to privately held Dell.

EMC shareholders are meeting Tuesday to vote on Dell's $60 billion offer, and approval is expected.

VMware President Carl Eschenbach, CFO Jonathan Chadwick, and Martin Casado, a vice president, all recently left the company.

Late Monday, VMware reported Q2 earnings and sales that exceeded analysts' estimates, and it also raised its forecasts. VMware stock ended trading up 9.1% on the stock market today, at a nine-month high above 68.

"While it is logical to assume that all of the noise around VMW of late, including management departures and M&A-related concerns, will have a negative effect on the business, we believe that business is surprisingly resilient and that the company continues to sign deals," Jefferies analyst John DiFucci said in a research report.

VMware's virtualization software is widely used in corporate data centers. The software enables computer servers to run different operating systems and apps, increasing workloads and adding network flexibility. VMware aims to stay a leader in corporate computing as companies move to cloud-based technology -- sharing servers and data storage in remote data centers.

"While some skeptics may believe Q2's double-digit growth drained the pipeline, management sounded notably positive around the foundation the team has built for the back half of the year, which includes a big renewal opportunity and increasing contribution from the emerging product portfolio," UBS analyst Brent Thill said in a research report.

VMware said Q2 revenue rose 11% to $1.69 billion, while earnings minus items rose 4% to 97 cents per share. Analysts had modeled EPS of 95 cents on revenue of $1.68 billion.

For the current quarter, VMware forecasts EPS ex items of $1.10 on sales of about $1.76 billion, vs. consensus estimates of $1.05 and $1.72 billion.

investors.com

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From: JakeStraw9/1/2016 8:37:43 AM
1 Recommendation   of 345
 
New Tracking Stock Offers Cheap Play on VMware
barrons.com

The VMware tracker to be issued by Dell next week as part of its EMC acquisition offers significant upside.

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To: JakeStraw who wrote (304)9/3/2016 9:43:06 AM
From: Glenn Petersen
   of 345
 
The full article for those stymied by the Barron's paywall:

New Tracking Stock Offers Cheap Play on VMware

The VMware tracker to be issued by Dell next week as part of its EMC acquisition offers significant upside.

By Andrew Bary Biography
Barron's
August 31, 2016



VMWare CEO Patrick Gelsinger speaking at the 2015 Mobile World Congress Photo: Simon Dawson/Bloomberg
_______________________

The newly created tracking stock for VMware that will be issued by Dell as part of its $58 billion deal to buy EMC looks like a cheap way for investors to play VMware.

Shares of the tracking stock, Dell Technologies Class V (ticker: DVMTV), have been trading in the when-issued market for about two weeks and now changes hands at $44.68, roughly a 39% discount to VMware’s ( VMW ) common shares, now fetching $73.33. VMware is a software company best known for its virtualization products.

The VMware tracked shares are being issued to EMC holders as part of Dell’s cash-and-stock acquisition of EMC. Dell announced yesterday that the deal received Chinese regulatory approval, the last hurdle to the transaction, and will close on Wed. Sept. 7. The ticker on the tracker will change to DVMT after the deal closes. EMC holders will receive $24.05 in cash and 0.111 shares of the VMware tracker for each EMC share. EMC shares are fetching $28.99 today, unchanged on the day. Investors also can play the VMware tracker by purchasing EMC shares since they will get the tracker once the deal closes next week.

Dell offered the tracker as part of the consideration for the EMC deal in order to give EMC holders continued exposure to the company and reduce the cash outlay for the deal. EMC owns about 80% of VMware.

Tracking stocks, which are designed to reflect the economic performance of the underlying company, typically trade at some discount to the regular stock but the discount on the VMware tracker is unusually wide. Liberty Media’s tracking stock for SiriusXM Holding ( LSXMA) now trades at $33.51, an estimated 12% discount to Sirius stock (SIRI). Investors understandably prefer to directly own shares in a company rather than a tracker.




Barron’s wrote earlier this month that EMC was an attractive arbitrage situation because of the effective discount being applied to the VMware tracker. At that time, EMC traded at $28.20.

At a price of $44.68 on the tracker, investors effectively are purchasing VMware at just 10 times estimated 2016 earnings of about $4.30 a share, and that doesn’t reflect the company’s $16 a share in net cash.

Why such a steep discount on the tracker? The shares will be a class of Dell common stock and thus be exposed to the credit risk of Dell, which will be highly leveraged following its purchase of EMC. If Dell fails, the tracker could be wiped out. While Dell will be a junk-grade company following the EMC deal with estimated debt to annual cash flow of about six, it will have a sizable amount of annual cash flow and plans to deleverage. Another issue is that investors are wary about Dell CEO Michael Dell’s intentions. While Dell is bullish on VMware, it conceivably could let VMware languish under its control to repurchase the tracker stock or VMware itself more cheaply down the road.

One sizable EMC holder says he sees several reasons why the tracker discount to VMware could narrow. For starters, it’s rumored that some big institutional investors may be ready to purchase the tracker as an alternative to VMware once the deal closes.

The tracker apparently is more liquid than VMware and likely will get even more so once the deal closes. There will be about 223 million shares of the tracker outstanding, more than double the roughly 80 million shares of VMware. Dell will hold the remaining VMware stock, a roughly 28% stake. The higher liquidity in the tracker could narrow the discount.

While Dell is expected to focus initially on paying down debt, it could be a buyer of the tracking stock and indeed has stated publicly that it “may look for opportunities to repurchase shares” of the tracker, or Class V common.

What’s the upside in the tracker? If the tracker discount narrows to 25%, the shares would trade around $55 — about 23% above the current price — assuming no change in VMware.

A spinoff of Dell’s VMware stake to tracker holders in a one-for-one share swap isn’t likely for five years because of adverse tax consequences, according to New York tax expert Robert Willens. Such a move would collapse the tracker/VMware spread. Even without that event, tracker investors still could score if the discount narrows.

barrons.com

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From: Glenn Petersen10/13/2016 6:17:32 PM
   of 345
 
VMware’s new cloud service will run on AWS

by Frederic Lardinois ( @fredericl)
TechCrunch
October 13, 2016



It’s been an open secret that Amazon’s AWS division and VMware were going to announce a partnership at a press conference in San Francisco later today. Thanks to VMware mistakenly posting its announcement early, we didn’t have to wait for the afternoon to know what the two companies will announce.

In what is surely a play to get more enterprises to move to AWS over its competitors — and to protect VMware’s leadership around virtual machines, VMware and AWS are bringing VMware’s software-defined data center software to AWS under the ‘ VMware Cloud on AWS‘ moniker.



This means that all of VMware’s infrastructure software like vSphere, VSAN and NSX will soon run on AWS. The service is currently in its technology preview phase and an invite-only beta will start in early 2017 and the service will likely come out of beta in mid-2017.

The service will be operated, sold and supported by VMware (not AWS) but integrate with the rest of AWS’ cloud portfolio (think storage, database, analytics and more).

“Our customers continue to ask us to make it easier for them to run their existing data center investments alongside AWS,” wrote Andy Jassy, CEO, AWS, in today’s announcement. “Most enterprises are already virtualized using VMware, and now with VMware Cloud on AWS, for the first time, it will be easy for customers to operate a consistent and seamless hybrid IT environment using their existing VMware tools on AWS, and without having to purchase custom hardware, rewrite their applications, or modify their operating model.”

At their event today, the two companies introduced a number of early customers. These include Western Digital and Sysco.

The companies stress that this is a jointly architected service that “represents a significant investment in engineering, operations, support and sales resources from both companies.” It will run on a dedicated AWS infrastructure that was “purpose-built for this offering.” VMware CEO Pat Gelsinger also today stressed the fact that AWS and VMware worked very closely together to create this service and stressed that this will become VMware’ primary public cloud solution.



“Currently in Technology Preview, VMware Cloud on AWS, will bring VMware’s enterprise class Software-Defined Data Center software to the AWS cloud, and will enable customers to run any application across vSphere-based private, public and hybrid cloud environments,” VMware’s Mark Lohmeyer writes in today’s (currently deleted) announcement. “It will be operated, managed and sold by VMware as an on-demand, elastically scalable service and customers will be able to leverage AWS services such as developer tools, analytics, databases, and more.”



While Microsoft, IBM and others have strongly focused on the idea of the “hybrid cloud” (that is, a setup where an enterprise uses both its own data centers and public cloud services like Azure, Google Cloud or AWS), Amazon has mostly ignored this market.

Given that VMware already dominates in many of these enterprise’s own on-premises data centers but doesn’t own a public cloud service to give these users a hybrid option — and that AWS doesn’t offer an on-premises version of its services — it makes sense for these two companies to team up now.

VMware also stressed in its announcement the hybrid capabilities this partnership enables and notes that it will bring “full VM compatibility and total workload portability between the datacenter and the AWS cloud.”



It’s worth noting that AWS already offered some support for VMware’s vCenter for managing virtual machines. Thanks to this, vCenter admins have long been able to manage their AWS EC2 cloud computing instances using the same software they use for managing their VMware virtual machines. That service, too, made it relatively easy to move existing virtual machines to EC2.

As IBM kindly pointed out in a series of emails meant to preempt today’s announcement, VMware and IBM already teamed up and announced a partnership back in February. This deal with AWS seems to go quite a bit further, though.

techcrunch.com

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From: Glenn Petersen10/27/2016 9:38:50 AM
   of 345
 
VMware Rising on Q3 Earnings Beat, Raises Full-Year View

By Tiernan Ray
Barron's
October 26, 2016, 4:56 P.M. ET

Shares of virtualization software pioneer VMware ( VMW) are up $1.44, or 2%, at $74.75, after the company this afternoon reported Q3 revenue and profit that topped analysts’ expectations.

Revenue in the three months ended in September rose 6%, year over year, to $1.78 billion, yielding EPS of $1.14, excluding some costs.

Analysts had, on average, been modeling $1.76 billion in revenue and $1.10 per share.

License revenue was up 1%, year over year, at $691 million.

CFO Zane Rowe said the company was “pleased with our Q3 financial performance, which exceeded the midpoint of our revenue and operating margin guidance” adding that the company “continue to broaden our portfolio with a range of products that will drive growth for the company.”

VMware said it formed a new business unit today, “Products and Cloud Services,” that will “extend VMware’s leadership across compute, storage, networking, management and business mobility,” to be run by Raghu Raghuram and Rajiv Ramaswami, and the duo will jointly take the title Chief Operating Officers, Products and Cloud Services.

Among other personnel shifts,

Sanjay Poonen is also taking on an expanded role as Chief Operating Officer, Customer Operations responsible for Worldwide Sales and Services, Channels, Marketing, and Global Communications. With these changes, Sumit Dhawan has been promoted to General Manager and Senior Vice President, End-User Computing, replacing Poonen in that role and Jeff Jennings has been promoted to Vice President and General Manager of the Networking and Security BU as Ramaswami moves into his COO role.

VMware management will host a conference call with analysts at 5pm, Eastern time, this evening, and you can catch a webcast of it on the company’s investor relations home page.

Update: On the call, VMware forecast results this quarter above expectations, and raised its year outlook.

The company sees revenue this quarter of $1.965 to $2.015 billion, and EPS of $1.37 to $1.41. That is better than consensus for $1.956 billion and $1.37 per share.

For the full year, the company now sees revenue of $7.025 billion to $7.075 billion, and EPS of $4.34 to $4.38 per share. That is up from the company’s prior forecast for $6.785 billion to $6.935 billion in revenue and $4.07 to $4.16 per share. It is also above consensus for $6.999 billion and $4.29 per share.

The stock is now up $2.49, or 3.4%, at $75.80.

blogs.barrons.com

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