Analyst Note| Abhinav Davuluri, CFA |
VMware reported fiscal 2023 third-quarter results in line with our expectations. The firm did not host an earnings call or provide guidance due to its pending $61 billion acquisition by Broadcom, which is expected to close by the end of January 2023. We are maintaining our probability-weighted $147 fair value estimate for narrow-moat VMware. We assign a 75% probability of the deal being completed at Broadcom's offer price of $138.23 per share, which consists of 50% received as $142.50 cash and 50% received as 0.2520 share of Broadcom per VMware share. Our stand-alone fair value estimate remains at $175 per share.