VMware (VMW) stock jumped Tuesday as a beat-and-raise quarter eased worries over management changes, amid parent EMC's (EMC) sale to privately held Dell.
EMC shareholders are meeting Tuesday to vote on Dell's $60 billion offer, and approval is expected.
VMware President Carl Eschenbach, CFO Jonathan Chadwick, and Martin Casado, a vice president, all recently left the company.
Late Monday, VMware reported Q2 earnings and sales that exceeded analysts' estimates, and it also raised its forecasts. VMware stock ended trading up 9.1% on the stock market today, at a nine-month high above 68.
"While it is logical to assume that all of the noise around VMW of late, including management departures and M&A-related concerns, will have a negative effect on the business, we believe that business is surprisingly resilient and that the company continues to sign deals," Jefferies analyst John DiFucci said in a research report.
VMware's virtualization software is widely used in corporate data centers. The software enables computer servers to run different operating systems and apps, increasing workloads and adding network flexibility. VMware aims to stay a leader in corporate computing as companies move to cloud-based technology -- sharing servers and data storage in remote data centers.
"While some skeptics may believe Q2's double-digit growth drained the pipeline, management sounded notably positive around the foundation the team has built for the back half of the year, which includes a big renewal opportunity and increasing contribution from the emerging product portfolio," UBS analyst Brent Thill said in a research report.
IBD'S TAKE: While VMware stock popped Tuesday, Atlassian and Citrix Systems are among the highest-rated stocks in IBD's Computer Software-Specialty Enterprise group. Find out more about these stocks using IBD Stock Checkup.
VMware said Q2 revenue rose 11% to $1.69 billion, while earnings minus items rose 4% to 97 cents per share. Analysts had modeled EPS of 95 cents on revenue of $1.68 billion.
For the current quarter, VMware forecasts EPS ex items of $1.10 on sales of about $1.76 billion, vs. consensus estimates of $1.05 and $1.72 billion.
