VMware’s Q4 profits forecasts above Wall Street expectations

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VMware predicts Q4 adjusted profits above Wall Street expectations, driven by the global demand for cloud computing. The vendor’s forecast for the fourth quarter expects adjusted profits of $1.96 per share, above analysts’ expectations of $1.89 per share.

The company made the forecast, saying it expected Q4 revenue to hit $3.51 billion, corresponding to analyst expectations of $3.55 billion, according to IBES data from Refinitiv.

VMware was spun off Dell Technologies earlies this year. The software company makes tools that enterprises leverage to make their data centers more efficient and move computing work back and forth between personal data centers and vendors like Azure and AWS.

VMware expects growth

The CEO, Raghu Raghuram, spoke to Reuters in an interview and said that the company believes it will record revenue growth from all world regions over the next fiscal year.

He added that IT spending continues to stabilize going into 2022. VMware’s view is that the customers will continue to accelerate application modernization.

For the fiscal third quarter ended October 29, VMware reported sales and adjusted profits of $3.19 billion and $1.72 per share. Both figures exceeded analysts’ expectations, who forecast $3.12 billion and $1.54 per share.

The spin off

Dell borrowed heavily over its existence to finance acquisitions and other deals that saw it grow. The figure stands at about $70 billion. With the spinoff, VMware is obligated to pay a special dividend to shareholders, totaling about $12 billion, which will lighten the debt load.

Wall Street grew weary of the complicated financial acrobatics keeping the Dell group together. A year ago, if the value of Dell’s VMware stake was deducted, the share price allocated no value to the remaining tech hardware business.

The spinoff and the plans accompanying it have seen Dell’s shares rise more than 80%, giving it a value (implied) of $33 billion+.