On the eve of a shareholder vote on Dell Inc.’s proposed $60 billion acquisition of EMC Corp., both the storage company and especially its VMware Inc. computing virtualization unit reported better-than-expected second-quarter results.

The results suggest Dell’s record high technology industry deal, which EMC shareholders are expected to vote to approve early Tuesday morning, will proceed with few issues related to the companies’ underlying businesses. IBM also reported better-than-expected revenues in a sign that overall economic conditions remain favorable as well for large information technology companies.

Both companies said their newer products drove their second-quarter growth. They’ve been suffering declines in their core products in the face of rapidly rising competition from cloud computing companies such as Amazon Web Services and Microsoft Azure as well as upstarts using newer and more efficient open-source software to run data centers and cloud-based applications.

EMC reported a profit before certain costs such as stock compensation of 45 cents a share, up a penny, or 5 percent, from a year ago and 3 cents higher than analysts on average had expected. Revenues of $6 billion hit expectations on the mark. Investors appeared moderately positive as its shares rose about 2 percent, to about $28, in extended trading after the market close.

EMC, which makes a variety of storage products, said in its release that newer products such as an expanded all-flash storage portfolio and its hybrid cloud and Virtustream cloud solutions performed “very well.” But it has faced competition from newer flash storage companies such as Pure Storage Inc. as well as cloud computing providers.

Losing momentum

According to the investment bank Raymond James, which downgraded shares today before the earnings report, EMC also appears to be losing momentum in the market thanks to lower engagement with reselling partners, high employee turnover and the distraction of the merger. Macquarie Securities has also downgraded EMC because it has a big transition to make toward cloud and flash-based storage.

Joe Tucci, EMC’s outgoing chairman and chief executive officer, said in a statement that he expects the Dell deal to proceed. “We had a strong second quarter and are well positioned as we look forward to combining with Dell to establish the world’s largest privately-controlled, integrated technology company,” he said in the statement.

VMware reported a profit before certain expenses of 97 cents a share, up from 93 cents a year ago and somewhat higher than the 95 cents analysts had expected on average. Revenues rose 11 percent from a year ago, to $1.69 billion, a hair above the $1.68 billion Wall Street forecast. It also raised its earnings guidance for the year. Investors cheered, moving shares up 9 percent in after-hours trading, to about $68.

The company, which operates independently, makes software called virtual machines that enables companies to put multiple operating systems and distinct computing workloads on a single server. Newer products such as its NSX software that replaces some of the functions of networking hardware and its virtual storage area network (VSAN) are responsible for much of its growth, CEO Pat Gelsinger said in comments during the analyst conference call.

“The strength of the new product areas is causing our growth to come to fruition,” he said. “We’ve crossed that initial chasm and we’ve seen the tornado of adoption.”

Crown jewel

Thanks to its higher growth than EMC, VMware is considered key to Dell’s EMC acquisition. Michael Dell himself (pictured above) has called VMware the “crown jewel” of the deal. “VMware is one of the big assets Dell is after,” said Glenn O’Donnell, a vice president and research director at Forrester Research Inc.

Still, the long process of closing the deal and getting it approved by regulators in the U.S. and China, leaves both EMC and VMware vulnerable to customers holding off on purchases and to rivals taking advantage of the uncertainty. Hewlett-Packard Enterprise CEO Meg Whitman, for one, has hit hard at Dell over the deal.

Some analysts are skeptical as well. Trip Chowdhry of Global Equities Research, said in a note the clients that he thinks VMware’s revenue guidance is too optimistic. “In short term, VMW results may be window-dressed to make DELL + EMC acquisition appear good, but the market is moving away from VMW, and sadly will not be coming back,” he wrote.

Although VMware’s shares are up 11 percent so far this year, they’re still way down since the acquisition offer was announced. In January, it laid off 800 people. It also faces new competition from makers of “container” software from Docker and others that allow applications to run even more easily and efficiently across cloud servers than virtual machines.

At a crossroads

“VMware’s at a big crossroads,” said Brian Gracely, an analyst with Wikibon, owned by the same company as SiliconANGLE. The key is how fast VMware can move to a substantially software- and cloud-based business, a difficult undertaking. VMware’s software license revenues, a key metric, rose 1 percent, to $644 million — somewhat higher than the expected $638 million.

But Gracely said it’s difficult to assess that progress from the closely watched enterprise license revenues because salespeople are incented to sell the licenses and so are pushing them as part of other products. As a result, he said, it’s hard to tell how many net new customers VMware is getting from the software side.

And the newer products inevitably cannibalize existing products, said O’Donnell. One positive, he said, is that the NSX software-defined networking line of products is “going gangbusters.” But for VMware’s overall transition, he said, “it’s too early to tell” how successful it will be.

EMC did not hold its usual analyst conference call, citing the shareholder vote the next day, so it provided no additional information beyond the press release.

Michael Dell spoke at EMC World in May with theCUBE, owned by the same company as SiliconANGLE:

Disclosure: TheCube was the paid media partner at EMC World. None of the show’s sponsors has editorial control over the content.