Thread regarding VMware layoffs

Dell had a gangbuster Q1, VMware had a disastrous Q1, hence the sale to Broadcom

If you're scratching your head as to why Michael Dell would want to sell VMware? Everyone said VMware is Dell's crown jewel in his portfolio. Everyone celebrated VMware going independent and said it was going to be a $20b revenue company, $100b market cap etc etc. So, why sell? And why such a cheap price of $140 per share?

Here's one reason.

In Q1, Dell grew their infrastructure business by 16% - server growth was 22%. Guidance for Q2 was 10% growth, even with all the Russia and supply chain issues.
https://blocksandfiles.com/2022/05/27/dell-q1-2023/

In Q1, VMware only grew by 3%, when the Street was expecting 6% - a major miss. They blamed Russia, supply chain and any other excuse, except their poor execution. No Q2 guidance because of the Broadcom deal, maybe Q2 was going to be worse than Q1.
https://www.nasdaq.com/articles/vmware-vmw-q1-earnings-miss-estimates-revenues-rise-y-y

Michael Dell probably sees one business executing well (Dell), and the other business tanking (VMware). So he decided to sell before the VMware shares collapsed. VMware management has themselves to blame for getting sold off to Broadcom at $140 per share, instead of a much higher price. Or to a better buyer that won't layoff 20K jobs.

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Post ID: @OP+1gZe25I4

3 replies (most recent on top)

Michael Dell Dell-ized VMware to the point many, I mean many A players left especially within the last 2yrs. He bled VMware dry then left it with $8B in debt. Pretty sure VMW had no debt prior to the acquisition in '16.

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Post ID: @2knz+1gZe25I4

No innovation coming of VMware any more. Other than ESX and a few other products, every product has hair on it. Much better services in the cloud.

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Post ID: @1jbm+1gZe25I4

Care to share your opinion what caused the poor execution at VMware?

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Post ID: @enq+1gZe25I4

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