VMware forecast current quarter revenue largely below Wall Street’s estimates, sending its shares down five percent in extended trading.
The company blamed poor sales in due to speculation about its future and weakness in China, Russia and Brazil. How the Dell deal could have influenced the whole quarter when it was only announced last week is anyone’s guess.
VMware forecast revenue of between $1.83 billion and $1.88 billion for the fourth quarter, its seasonally strongest. Analysts on average were expecting revenue of $1.88 billion.
Analysts were not mincing their words. Speaking from a pile of sack-cloth and ashes FBR Capital Markets analyst Daniel Ives predicted “dark days ahead for VMware” as this company is “heading down a troubled path” where death awaits it with pointy teeth – we added the last bit.
VMware also said on Tuesday that it would form a new cloud services business with EMC that would operate under the Virtustream brand.
The new business will be jointly owned by VMware and EMC.
“This initiative is around creating a tighter integration for both companies as they go after the elusive cloud opportunity,” Ives said.
Virtustream’s results will be consolidated into VMware’s financials, starting in the first quarter of 2016.
EMC, which owns about 80 percent of VMware, bought Virtustream for $1.2 billion in July.
VMware’s revenue rose to $1.67 billion in the third quarter ended Sept. 30, from $1.52 billion a year earlier.