Revenue rose a
stronger-than-expected 69 percent.
BOSTON (Reuters) - Business software maker VMware Inc reported higher first-quarter profit on Tuesday as its revenue rose a
stronger-than-expected 69 percent, sending its shares up 18 percent.
VMware also reiterated its forecast for 2008 revenue growth of about
50 percent, reassuring investors who had worried that increased
competition from companies like Oracle Corp and Microsoft Corp would hurt growth, analysts said.
Chief Executive Diane Green told analysts on a conference call that
she expected VMware to maintain the current rate of growth "well beyond
Pacific Growth Equities analyst Kaushik Roy said that the strong
results contrasted with negative investor sentiment in advance of the
"There was a lot of chatter on the Street they would miss, but they
were significantly above the Street consensus on total revenues," he
VMware's first-quarter revenue rose to $438.2 million from the
year-earlier period's $258.7 million, beating the average analyst
forecast of $421 million, according to Reuters Estimates.
Net income in the quarter rose to $43 million from $41 million.
Earnings per share fell to 11 cents from 12 cents a year earlier, when
it had fewer shares outstanding.
VMware had quarterly profit excluding items of 22 cents, in line with the Wall Street estimate.
VMware's software allow companies to run multiple "virtual" server
computers on a single server. Its top-selling products allow one server
to perform the work of 10 or more machines.
The company forecast that second-quarter revenue will rise 55
percent and also reiterated its forecast for 2008 revenue growth of
about 50 percent.
VMware's stock rose to $68.47 in extended trading, compared to its
New York Stock Exchange close of $58.02. The company's shares made
their debut at $29 in August 2007 and reached a high of $125.25 in
VMware's stock trades for about 38 times next year's average
per-share earnings forecast, according to Reuters Estimates. Microsoft
and Oracle each trade for about 14 times the average forecast for next
year's earnings per share.
Customers save hundreds of dollars per year on every virtual machine
that they create with the software. Those savings -- on electricity,
maintenance, labor, real estate and other costs -- are on top of
savings on physical servers that the software allows them to avoid
EMC Corp, which owns a majority stake in VMware, rose to $16.30 from a New York Stock Exchange close of $15.59.
(Editing by Andre Grenon and Carol Bishopric)
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