VMware, Inc. (NYSE:VMW) stock rose 2.36% (As on May 27, 11:08:25 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the first quarter of FY 22. Subscription and SaaS revenue for the first quarter was $899 million, an increase of 21% year-over-year. There is continued momentum in the subscription and SaaS business, constituting 29% of total revenue for the quarter. While license revenue was impacted by the transition to subscription and SaaS, the combination of subscription and SaaS and license revenue was $1.47 billion, an increase of 6% from the first quarter of fiscal 2022. Non-GAAP net income for the first quarter was $542 million, down 27% compared to $744 million, for the first quarter of fiscal 2022. Non-GAAP operating income for the first quarter was $771 million, a decrease of 16% from the first quarter of fiscal 2022. The company generated operating cash flow for the first quarter of $1.01 billion. Free cash flow for the first quarter was $899 million. RPO for the first quarter totaled $11.56 billion, up 5% year-over-year.

VMW in the first quarter of FY 22 has reported the adjusted earnings per share of $1.28, missing the analysts’ estimates for the adjusted earnings per share of $1.57, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 3 percent to $3.09 billion in the first quarter of FY 22, missing the analysts’ estimates for revenue of $3.19 billion.

Meanwhile, Broadcom Inc plans to acquire cloud computing company VMware Inc in a $61 billion cash-and stock deal, the chipmaker’s biggest and boldest bid to diversify its business into enterprise software. The acquisition is the second biggest announced globally so far this year, trailing only Microsoft Corp’s $68.7 billion deal to buy video game maker Activision Blizzard Inc. The offer of $142.50 in cash or 0.2520 of a Broadcom share for each VMware stock represents a premium of nearly 49% to the stock’s last close before talks of the deal were first reported on May 22. Broadcom will also assume $8 billion of VMware’s net debt. The deal will almost triple Broadcom’s software-related revenue to about 45% of its total sales. Broadcom has already got commitments from a consortium of banks for $32 billion in debt funding. VMware, which said the offer was unsolicited, will be allowed to solicit offers from rival bidders for 40 days as part of the agreement.