Late Monday, VMware (NYSE: VMW) announced that it will acquire SpringSource, a privately held company. The deal carries a total value of $420 million, which will consist of $362 million in cash and equity along with $58 million in unvested stock and options. The deal is expected to close in the third quarter of the year.The acquisition is believed to have been made in order to help VMW expand its management software in order to work with what is known as cloud computing services. Cloud computing is a service over the Internet where users have an external company run the applications.
VMW's CEO noted that the integration between the two companies will enable businesses to know what cloud applications are doing, and it will offer management for the cloud applications.
Technically, share of VMW have run headlong into resistance from its 50-week moving average. This trendline has acted in this role two other times since the middle of April. The good news is that VMW's 10- and 20-week moving averages are in a position to provide support. Can the stock get back to the $115 level, where the shares were positioned shortly after the company's IPO? It sure doesn't look like it is going to happen any time soon as there is too much resistance in place and the technology market isn't what it used to be.
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