VMware paid a lot of money, but less than you might think, for SD-WAN startup VeloCloud. The price wasn't revealed at the time the acquisition was announced, but industry analyst Scott Raynovich, the man behind research firm Futuriom, did some SEC filing sleuthing and reports that price to be $449 million.
Raynovich, in his blog today, discusses the price and the implications of the price on the SD-WAN market as a whole, especially the dozens of privately held, venture-backed firms that are seeking some kind of exit in this white hot market. With no hard numbers to go on at the time of the sale, the new SEC filings also suggest that some in the industry might've been too optimistic about VeloCloud's growth rate.
Indeed, "if VeloCloud was close to a $100 million run rate in 2017, as it indicated to some analysts, neither the acquisition price nor the customer contracts disclosed as part of the deal back that up," Raynovich writes.
Here's a quick look at VeloCloud's highlights since 2014:
Hey, I don't know if it will be a good deal over time. But you would have to make $450M in profit to balance the expense. They will have to put a bunch of Goodwill on the Balance Sheet that they can write down the next time there is a blip in earnings. It always galls me that Management Teams feel nothing about spending the shareholder's money.
As the editors recap Light Reading's event series on network functions virtualization (NFV) and software-defined networking (SDN), technologies like 5G and edge computing arrive just in time to hurry the industry along its path to more modern networks and add plenty of drama.