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Smart Move: VMware Now Looking To Partner, Rather Than Compete, With The Public Cloud

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Smart Move: VMware Now Looking To Partner, Rather Than Compete, With The Public Cloud

Thanks to a shift in strategy, VMware, Inc. (NYSE: VMW) has been upgraded by Baird analyst Jayson Noland to Outperform, with a price target raised from $90 to $115.

“We aren't making a call on the quarter, but we believe VMware is better strategically positioned now than in years,” Noland said in a Wednesday note. 

No More Fighting Clouds

VMware recently sold vCloud Air, signaling a strategic shift away from competing with the public cloud, and toward partnering instead.

The company also recently struck a deal with Amazon.com, Inc. (NASDAQ: AMZN)'s Web Services in which the latter will provide hardware allowing end-users to deploy VMware legacy applications rather than revamp their systems.

“We were skeptical at first, but have increasingly come to see this as a big deal,” said Noland.

Other Partnerships

VMware has end-user computing partnerships with Microsoft Corporation (NASDAQ: MSFT), International Business Machines Corp. (NYSE: IBM), and Dell Inc.

The Dell agreement in particular has the potential for $1 billion in synergies in calendar year 2017, according to the Baird note. 

VMware reports its first-quarter earnings on Thursday after the close. The company shifted its fiscal year earnings to January from December to line up with Dell’s. Investors should expect some confusion regarding year over year and Street estimate comparisons.

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Image Credit: By Raysonho @ Open Grid Scheduler / Grid Engine - Own work, CC0, via Wikimedia Commons

Latest Ratings for VMW

DateFirmActionFromTo
Jan 2020MaintainsEqual-Weight
Dec 2019Initiates Coverage OnOverweight
Nov 2019MaintainsReduce

View More Analyst Ratings for VMW
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