China\’s Antitrust Review Progress Sparks Hope for VMware-Broadcom Deal: A Turning Point? ($VMW; $AVGO)

The proposed $61 billion acquisition of VMware by Broadcom, a significant event in the tech industry, appears to be making strides in China\’s antitrust review. The deal spread has seen a contraction, moving from $42.08 to $40.95, indicating a shift in market sentiment that could be interpreted as optimism.

In a noteworthy development, China\’s antitrust regulator has enlisted the expertise of external economists for a thorough examination of the deal. This decision, following initial discussions with industry participants during the Phase-2 review, may be indicative of a positive trajectory for the deal\’s approval by China\’s State Administration for Market Regulation.

This advancement in China\’s antitrust review follows a report from Reuters earlier this week, which suggested that Broadcom is poised to receive conditional European Union antitrust approval for its acquisition of VMware, a leader in cloud computing. The approval is predicated on Broadcom\’s commitment to provide interoperability for its competitors, thereby addressing the European Commission\’s antitrust concerns.

However, the acquisition is also under scrutiny by the U.S. Federal Trade Commission and the UK\’s antitrust regulator. Broadcom is currently awaiting feedback from the European antitrust regulators regarding VMware before it responds to the FTC\’s second request.

Despite these challenges, the recent progress in China\’s antitrust review has sparked renewed optimism about the deal\’s prospects. If approved, the acquisition could significantly enhance Broadcom\’s standing in the cloud computing market, while providing VMware with additional resources for innovation and expansion of its product offerings.

The VMware-Broadcom deal, if successful, could mark a significant turning point in the global cloud computing landscape. The final outcome of the antitrust reviews will undoubtedly have profound implications for the industry, potentially redefining the dynamics of competition and collaboration in the cloud computing sector.

Earnings Insights & Expectations: vmware Inc ($VMW)

On June 1, 2023, VMWare Inc announced its latest quarterly earnings report, which showed a normalized EPS of $1.49, falling short of the estimated figure by $0.02. Similarly, the GAAP EPS was below expectations at $0.52, missing by $0.22. The company\’s revenue for the quarter came in at $3.28 billion, missing the forecast by $30.96 million. The next earnings report for the upcoming quarter will be released on August 29, 2023, with an estimated normalized EPS of $1.72 and a projected GAAP EPS of $0.96. The revenue forecast for the quarter is $3.46 billion.

Quarterly Review
Total Revenue	$3.28 billion (6% increase YoY)
Subscription and SaaS Revenue	$1.22 billion (35% increase YoY)
GAAP Net Income	$224 million ($0.52 per diluted share, 9% decrease YoY)
Non-GAAP Net Income	$653 million ($1.52 per diluted share, 2% increase YoY)
Operating Cash Flow	$1.75 billion
Free Cash Flow	$1.61 billion
RPO (Remaining Performance Obligations)	$13.01 billion (13% increase YoY)
Cash, Cash Equivalents and Short-Term Investments	$10.59 billion
Unearned Revenue	$8.45 billion

Business Highlights & Strategic Announcements Summary
Leadership Change	Karen Dykstra to take on the role as CFO, Zane Rowe to depart
Mobile World Congress 2023 Announcements	Innovations, enhancements, and partnerships to meet the evolving needs of Communications Service Providers (CSPs) and enterprises
VMware Telco Cloud Platform	Accelerate network modernization and capture 5G and edge opportunities
Project Kauai	Expand VMware Telco Cloud Platform RAN deployment options to include bare metal resources
Next-Generation Networking	VMware NSX delivering telco-grade intelligent networking and lateral security capabilities
Vodafone Qatar Collaboration	Selected VMware Telco Cloud Platform-5G Edition and VMware Cloud Foundation with Tanzu
Samsung Collaboration	Integration of Samsung’s ORAN compliant virtualized RAN solutions and VMware Telco Cloud Platform
NTT DATA Collaboration	Expanded collaboration to accelerate the path to software-defined, large-scale Open RAN deployments
VMware Cross-Cloud Managed Services	Prescriptive offerings with enhanced partner and customer benefits
VMware Partner Connect Program	Unified program for all partner types
VMware Anywhere Workspace Platform Enhancements	Major changes to the Workspace ONE architecture
VMware Aria Automation	Ranked as a leader in The Forrester Wave™ Infrastructure Automation
ESG Leadership Recognition	Recognized by Newsweek and Forbes for its commitment to Diversity, Equity and Inclusion (DEI)

Key Growth Drivers and Commentary:

Innovations and Partnerships: The announcements made at the Mobile World Congress 2023, including the unveiling of Project Kauai and the next-generation networking with VMware NSX, demonstrate VMware\’s commitment to innovation and strategic growth. These initiatives could potentially open up new revenue streams and strengthen VMware\’s market position.
Collaborations with Vodafone Qatar, Samsung, and NTT DATA: These collaborations could enhance VMware\’s reach and influence in the telecommunications industry, particularly in the areas of 5G and cloud technologies. This could lead to increased market share and revenue growth.
VMware Cross-Cloud Managed Services: The introduction of these services could enable VMware to better meet the needs of its partners and customers, potentially leading to increased customer satisfaction and loyalty.
VMware Anywhere Workspace Platform Enhancements: The major changes to the Workspace ONE architecture could improve performance and scalability, potentially attracting more customers and boosting revenue.
ESG Leadership Recognition: VMware\’s recognition for its ESG leadership and commitment to DEI could enhance its corporate reputation, potentially attracting socially conscious investors and customers.

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