VMware posted solid Q2 results that exceeded profit and revenue estimates in what is expected to be one of its final earnings announcements as a public entity.
The organization posted a net profit of $347 million for the quarter, a decrease from the $411 million profit achieved in the same period last year. Earnings per share before expenditures were $1.64, with revenue increasing slightly by 6 percent to hit the $3.34 billion mark. It was a decent but ordinary performance, with Wall Street expecting earnings of $1.57 per share on $3.3 billion in revenue.
Impending acquisition
VMware’s share price barely shifted in extended trading since the business is on the cusp of being acquired by chipmaker Broadcom. The $61.2 billion transaction is expected to close in the coming months. Although the closure date is unknown, Broadcom has stated that the transaction should be completed within its fiscal year 2023, which starts in November.
VMware appears to be a good fit for Broadcom. Established in 1998, the firm has become intertwined with virtualization software, which allows apps and workloads to be condensed onto fewer servers. Servers can execute more applications and workloads at the same time, improving data center efficiency.
Broadcom and VMware
The firm is by far the most dominating player in the virtualization software sector, but many feel it could be more successful than it is now. The issue with VMware is that it is deeply embedded in on-premises data centers.
The unique selling point of cloud computing has become somewhat ambiguous as it has grown in popularity. The firm attempted and failed to create its own cloud products before entering into agreements with public cloud players like Amazon Web Services. Unfortunately, those initiatives have not resulted in significant growth for VMware.
Broadcom is best known for creating computer chips, but also has a burgeoning data center software business, which analysts say could benefit from VMware’s assets.
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