The calculations below outline how an intrinsic value for VMware is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (USD, Millions)||$1,874.66||$2,411.84||$2,559.21||$2,646.03||$2,851.50|
|Source||Extrapolated @ (11.69%)||Analyst x15||Analyst x13||Analyst x4||Analyst x1|
Discounted (@ 10.1%)
Present value of next 5 years cash flows:
Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $2,852 × (1 + 2.3%) ÷ (10.13% – 2.3%)
Terminal value based on the Perpetuity Method where growth (g) = 2.3%:
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
Value = Total value / Shares Outstanding ($32,274 / 410)
Value per share:
Current discount (share price of $99.93): -27%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 10.13% = 2.33% + (1.016 * 7.67%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
1.016 = 0.991 (1 + (1- 30%) (3.66%))
Levered Beta used in calculation = 1.016
Are VMware's annual earnings growth expected to exceed 3.4% over the next 3 years?
Mr. Patrick P. Gelsinger, also known as Pat, has been the Chief Executive Officer of VMware, Inc. since September 1, 2012. Mr. Gelsinger has more than 30 years of experience in general management and product development positions. He served as the President, Chief Operating Officer and President of Information Infrastructure Product at VMware, Inc. since September 2009. He served as a Technical Advisor of Empire Ventures, Inc. He served as General Manager of the Digital Enterprise Group and Senior Vice President of Intel Corporation since September 2005 and from January 2005 to September 2009 respectively. He served as Co-general Manager and General Manager of the Digital Enterprise Group of Intel Corporation since January 2005 and May 2005 respectively. He joined Intel in 1979, held a variety of research, development and general management positions at Intel Corporation, including responsibility for the Intel 486(TM) and Pentium(R) Pro processor families and management of Intel's Desktop Products Group. He served as Group Vice President of Intel. He served as Head of Intel Labs. Mr. Gelsinger led Intel's Corporate Technology Group, which encompasses many Intel research activities, including leading Intel Labs and Intel Research and driving industry alignment with these technologies and initiatives. He served as the Chief Technology Officer of the Intel Architecture Group. He led the Desktop Products Group, where he was responsible for Intel's desktop processors, chipsets and motherboards for consumer and commercial OEM customers as well as Intel's desktop technology initiatives and the Intel Developer Forum. From 1992 to 1996, he was instrumental in defining and delivering the Intel® ProShare® video conferencing and Internet communications product line. He served as Director of the Platform Architecture Group, Design Manager and Chief Architect of the original i486™ microprocessor, manager of CAD methodologies and key contributor on the original i386™ and i286 chip design teams. He has been a Director of VMware, Inc. since September 1, 2012. He served as a Director of TriVium Systems, Inc. He served as a Director of IP Dynamics Inc. He serves as the Chairman of Trustees at William Jessup University. Mr. Gelsinger holds six patents and six applications in the areas of VLSI design, computer architecture and communications. He has more than 20 publications in these technical fields, including "Programming the 80386," published in 1987 by Sybex Inc. He has received numerous Intel and industry recognition awards. In 2008, he was named a Fellow of the IEEE and awarded an Honorary Doctorate of Letters in 2008 from William Jessup University. Mr. Gelsinger received an associate's degree from Lincoln Technical Institute in 1979, a bachelor's degree from Santa Clara University in 1983, Magna Cum Laude and a master's degree from Stanford University in 1985, all degrees are in Electrical Engineering.
Average tenure of the VMware management team:
Average tenure of the VMware board of directors:
VMware, Inc. provides virtualization and cloud infrastructure solutions in the United States and internationally. Its virtualization infrastructure solutions includes a suite of products and services designed to deliver a software-defined data center(SDDC), run on industry-standard desktop computers, servers, and mobile devices; and supports a range of operating system and application environments, as well as networking and storage infrastructures. The company offers VMware vSphere, a data center platform, which enables users to deploy hypervisor, a layer of software that resides between the operating system and system hardware to enable compute virtualization; storage and availability products that provide data storage and protection options; network and security products; and management and automation products to manage and automate overarching IT processes involved in provisioning IT services and resources to users from initial infrastructure deployment to retirement. It also provides SDDC suites, including VMware vCloud suite, vSphere with Operations Management, and VMware vRealize suite for building and managing a cloud infrastructure for use with the vSphere platform. In addition, the company offers Cloud Foundation, a SDDC delivery independent platform that can be deployed on-premises or run as-a-service. Further, it provides hybrid cloud computing solutions, such as VMware vCloud Air Network and vCloud Air; and end-user computing solutions that enable customers to securely deliver access to applications and data for their end users from various devices. The company sells its products through distributors, resellers, system vendors, and systems integrators. VMware, Inc. has a strategic alliance with Amazon Web Services to build and deliver an integrated hybrid solution; and a collaboration with Trend Micro Incorporated. The company was incorporated in 1998 and is headquartered in Palo Alto, California. VMware, Inc. is a subsidiary of Dell Technologies Inc.
|Market Cap:||$40,937 million|
3401 Hillview Avenue, Palo Alto, 94304, United States
|Sector:||Software and Services|