VMware (NYSE:VMW) announced today it has agreed to acquire AirWatch, an Atlanta-based firm engaged in enterprise mobile management and security solutions, for $1.175 billion in cash and another $365 million in installment payments and unvested equity.

"AirWatch provides best-in-class, secure, enterprise-mobile management to thousands of businesses around the world," said VMware CEO Pat Gelsinger in a press release. "With this acquisition VMware will add a foundational element to our end-user computing portfolio that will enable our customers to turbo-charge their mobile workforce without compromising security."

AirWatch's existing 1,600 employees will continue to report to John Marshall, who is the current CEO of AirWatch, in VMware's End-User Computing group, which is currently led by VMware Executive Vice President Sanjay Poonen. AirWatch currently has more than 10,000 customers and it provides enterprises with a platform to manage their mobile devices securely.

"By joining a proven innovator like VMware, we now have an opportunity to bring our leading-edge solutions to an even broader set of customers and partners to help them optimize for the mobile-cloud world," added Alan Dabbiere, AirWatch's co-founder and chairman.

In addition to the announcement of the acquisition of AirWatch, VMware also announced its preliminary fourth-quarter results, including a 15% year-over-year growth in revenue to $1.48 billion and a gain of 20% when excluding all divestitures that occurred in 2013.

Non-GAAP operating margin is expected to be 35.6% and GAAP operating margin is anticipated to be 25.2%. These are well above the margins VMware reported in the fourth quarter of last year, when non-GAAP margin stood at 32.8% and GAAP margin was 19.5%. 

"I'm delighted with our overall Q4 performance, with total revenue expected to exceed the high end of our guidance range," noted VMware chief financial officer Jonathan Chadwick in the press release.

Full fourth-quarter earnings are scheduled to be announced Jan. 28. Following regulatory approval, the acquisition of AirWatch is expected to be complete at the end of the first quarter.


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