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5 Takeaways From J.P. Morgan Quarterly Survey Of VMware Partners

VMware channel partner metrics trended downward in the fourth quarter, and the pace of customers virtualizing their server environments is slowing, according to a survey of VMware partners conducted by the investment bank.

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Partner Metrics Come In Lower Versus Last Year

VMware channel partner metrics trended downward in the fourth quarter, according to a survey released Feb. 28 by investment bank J.P. Morgan.

“Almost all quantitative feedback came in at lower levels compared to last quarter and last year, but the feedback remains in positive territory,” J.P. Morgan analyst Mark Murphy said in the report. “The only exception is the pace at which customers are virtualizing servers fell into negative territory, which we have witnessed once or twice previously.”

J.P. Morgan posed 12 questions to 32 unnamed VMware channel partners and conducted “deep-dive” interviews with two partners for the quarterly survey, which it stated conducting in the first quarter of 2015.

VMware -- which has 75,000 partners overall -- declined comment on the report. The company on Feb. 28 announced its revenue increased 16 percent to $2.59 billion for the fourth quarter that ended Feb. 1. It posted net income of $502 billion, compared to a $387 million net loss in the same quarter of 2017.

J.P. Morgan on Feb. 28 also said it removed VMware from its analyst focus list due to its valuation and -- which stood at $73.04 billion at market close on Friday – and the likely impact that VMware’s planned $11 billion special dividend, announced in December, would have on its free cash flow.

“Longer-term, we think VMware is benefitting from a strong and broadening product portfolio and hybrid cloud demand from technology buyers,” Murphy said in the report. “Nearly all metrics remain in positive territory, though less elevated compared to recent levels. We remain fundamentally positive given the broader/deeper product portfolio, with about five products at or near (a) $1 billion bookings run-rate.”

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