VMware, Inc. (VMW) Accused of Misleading Investors
One of the financial metrics VMware regularly reports is its backlog, which the Company purports is comprised of “unfulfilled purchase orders or unfulfilled executed agreements at the end of a given period.” Between March 2019 and February 2020, VMware reported hundreds of millions of dollars in backlog in a series of press releases and financial reports, each time attesting to the accuracy of the Company’s financial reporting as well as its maintenance of effective internal control over financial reporting. Then, on February 27, 2020, VMware disclosed that the SEC was conducting an investigation into the Company’s backlog and associated accounting and disclosures. VMware reported that it was “fully cooperating with the SEC’s investigation and is unable to predict the outcome of this matter at this time.” On this news, VMware stock fell $15.11 per share, or more than 11%, to close at $120.52 per share.