VMware Beats Street Forecasts in Q4 Earnings Report

By Chris Preimesberger  |  Posted 2010-01-25 Print this article Print

VMware reports its revenue increased 18 percent to $608 million in the fourth quarter, substantially above the average analyst forecast of $554 million. The virtualization company also reports profit of 31 cents a share, which beat the average analyst forecast of 26 cents.

Virtualization software maker VMware on Jan. 25 dazzled Wall Street with its quarterly results and cautiously predicted that its sales and licensing income growth could more than double in 2010 over the previous year-if the economy continues to improve.

Revenue for the company increased 18 percent to $608 million, substantially above the average analyst forecast of $554 million. The report, delivered an hour after the closing bell, increased share prices by 18.6 percent late in the day, from the closing price of $42 to $49.60 after hours on the NASDAQ listing.

VMware also reported profit of 31 cents per share, which beat the average analyst forecast of 26 cents.

It wasn't a perfect report; the company's net income fell to $56.4 million, or 14 cents per share, from $111.5 million, or 29 cents, a year earlier, thanks to higher operating expenses, VMware Chief Financial Officer Mark Peek said. The company added about 400 new employees in the quarter, Peek said.

However, Peek also said he believes VMware's revenue could climb from 21 to 26 percent this year after growing just 8 percent in 2009.

The virtualization trends of the past decade are continuing, VMware CEO Paul Maritz said, leaving the company with a "great opportunity."

Maritz said the improving economy has boosted VMware's-and other companies'-software sales, especially given overdue demand from customers that wanted to update their data centers but lacked the capital to buy new software and hardware in 2009.

"Virtualization is not just a tactical ingredient to enable more efficient utilization of hardware," Maritz said. "It is in fact a strategic way in which to build the data center of the future and to build a bridge to the cloud."

VMware, majority-owned by EMC, forecast that first-quarter revenue would rise 23 to 28 percent from 2009 to between $580 million and $600 million, distinctly above the $530 million average analyst forecast. It added that full-year revenue could rise to between $2.45 billion and $2.55 billion, above the $2.28 billion average analyst forecast.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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