VMware (VMW) Management Not Changing Outlook, Whatever EMC (EMC) Says - Analysts

May 31, 2013 9:44 AM EDT Send to a Friend
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Price: $83.67 -0.17%

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Amid cautious comments from EMC Corp (NYSE: EMC) on Thursday, VMware (NYSE: VMW) shares are higher on the session as Nomura's Rick Sherlund and RBC's Matthew Hedberg are commenting on expectations.

EMC guided VMware free cash flow to $1.525 billion in 2013, which is roughly 25 percent below current consensus expectations. CFFO is expected at $1.875 billion, with Nomura at $2.275 billion and consensus views of about $2.4 billion.

Sherlund notes that, after speaking with management, "there is no change in its guidance and noted differences in how EMC and VMware report CFFO (mostly due to stock-based comp) and historical differences between EMC and VMware reported cash flow numbers."

Channel checks indicated that business was about in-line for VMware at this point in Q2. Sherlund comments, "We have some concern that there are relatively few vCloud suite specialists to leverage, and the number of partners that resell the suite is very low relative to those that sell just the core vSphere."

RBC's Hedberg thinks EMC might have included the VMware estimates as a "conservative 'plug' for illustrative purposes."

Nomura has VMware at Neutral with a $90 price target. RBC is at Outperform on the name.

For an analyst ratings summary and ratings history on VMware click here. For more ratings news on VMware click here.

Shares of VMware closed at $71.50 yesterday.


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