VMware Inc. CEO Pat Gelsinger isn’t the least bit surprised by the market’s harsh reaction to recent earnings reports from Netflix Inc., Pivotal Software Inc. and — yes — his own company.
“The market is looking for bad news, any hint of bad news, after the largest expansion in history,” Gelsinger told MarketWatch in a one-on-one interview in San Francisco. “There are trade concerns over China, and tech-lash.”
“Our results were the overreaction to the anxiety in the marketplace, and sensitivity to broad factors,” he continued, nodding to other companies whose stock was recently battered after earnings announcements, such as Pivotal PVTL, -3.94% and Netflix NFLX, -0.92% .
The tech industry writ large also faces the burden of being lumped into the same national political discussion over issues of antitrust embodied by Big Tech and potential dangers of artificial intelligence, said Gelsinger, who was recently named the top CEO in Glassdoor’s annual poll.
“The political cycle is still in front of us. We will hear about Big Tech and China,” said Gelsinger, who remains focused on the long view despite the near-term national discussion.
Last week, VMware VMW, -0.36% said it acquired its second startup in two months, AI chip virtualization firm Bitfusion. In mid-June, VMware announced its intention to buy Avi Networks, a cloud-application delivery platform.
The proposed deals, coupled with news Monday that VMware has inked an accord with Alphabet’s GOOGL, -0.27% GOOG, -0.88% Google Cloud, further illustrate Gelsinger’s propensity to take calculated gambles.
The biggest roll of the dice occurred three years ago. After years of on-again, off-again negotiations, VMware and rival Amazon Web Services stopped circling one another, and signed a partnership in October 2016 to start a hybrid cloud service. Nearly three years later, in April, VMware inked a similar deal with Microsoft Corp. MSFT, -0.22% .
“For two decades, we (VMware and Amazon) kicked, clawed, and spit at each other,” he said. “Five years ago, cloud would have been seen as a threat to VMware.”
The agreement, he said, was a “defining moment” that led to “a hybrid cloud model with Amazon.”
Since the Amazon AMZN, -1.57% deal, VMware shares have more than doubled to $177.66 from $78.73. This year, they’re up 30%, though they tumbled in late May after VMware announced first-quarter results.