Washington, Sep 13 (SocialNews.XYZ) The US Securities and Exchange Commission (SEC) has charged enterprise cloud services provider VMware for misleading investors by obscuring the company's financial performance.
VMware, acquired by chip and software maker Broadcom from Dell Technologies for $61 billion in May this year, misled investors about its order backlog management practices, which enabled the company to push revenue into future quarters by delaying product deliveries to customers.
"As the SEC's order finds, by making misleading statements about order management practices, VMware deprived investors of important information about its financial performance," said Mark Cave, Associate Director in the Division of Enforcement.
"Such conduct is incompatible with an issuer's disclosure obligations under the federal securities laws," Cave said in a statement late on Monday.
The SEC found that, beginning in fiscal year 2019, VMware began delaying the delivery of license keys on some sales orders until just after quarter-end so that it could recognise revenue from the corresponding license sales in the following quarter.
According to the SEC's order, VMware shifted tens of millions of dollars in revenue into future quarters, building a buffer in those periods and obscuring the company's financial performance as its business slowed relative to projections in fiscal year 2020.
Although VMware publicly disclosed that its backlog was "managed based upon multiple considerations", it did not reveal to investors that it used the backlog to manage the timing of the company's revenue recognition.
The SEC said that VMware violated antifraud provisions of the Securities Act of 1933 as well as certain reporting provisions of the federal securities laws.
"Without admitting or denying the findings in the SEC's order, VMware consented to a cease-and-desist order and to pay an $8 million penalty," it added.
Source: IANS
About Gopi
Gopi Adusumilli is a Programmer. He is the editor of SocialNews.XYZ and President of AGK Fire Inc.
He enjoys designing websites, developing mobile applications and publishing news articles on current events from various authenticated news sources.
When it comes to writing he likes to write about current world politics and Indian Movies. His future plans include developing SocialNews.XYZ into a News website that has no bias or judgment towards any.
He can be reached at gopi@socialnews.xyz