vSphere Spurs VMware to Sharply Improved Profit in Q4

By Chris Preimesberger  |  Posted 2011-01-24 Print this article Print

Thanks largely to its vSphere platform, VMware reported sharply improved quarterly and fiscal-year revenue and profits.

VMware-with a boost from the release of several products in 2010-continues to ride high on the data-center-virtualization and cloud-computing wave.

Thanks largely to sales and services connected with its popular vSphere platform, the Palo Alto, Calif.-based world virtualization market leader on Jan. 24 reported sharply improved quarterly and fiscal-year revenue and profits.

vSphere accounts for about 90 percent of the company's sales, Chief Financial Officer Mark Peek said on the quarterly earnings conference call.

Revenue rose 37 percent to $836 million for the quarter, far exceeding Wall Street estimate of $804 million. Fourth-quarter profits were $120 million (28 cents per share), compared with $56 million (14 cents per share) in Q4 2009.

Excluding some one-time items, VMware's earnings for the quarter were 46 cents a share.

VMware's new vCloud, vShield, and other products added fresh streams of revenue, CEO Paul Maritz said on the earnings conference call. He also touched on VMware's longer-term strategy of selling its wares to small and midsize businesses and mid-range businesses in developing economies.

"We're investing in the high-growth regions of the world as they begin to enter into this product area. So we'll begin to see expansion of our product line in those areas [in 2011 and 2012]," Maritz said.

Maritz also said that the company would be focusing heavily in 2011 on virtual-desktop tools and data-center-management offerings for the virtual-machine environment.

Peek said the company does not expect to see any major improvement in its operating margins this year.

VMware expects revenue for the Q1 quarter to be between $800 million and $820 million, Peek said, adding that 2011 overall revenue should come in between $3.45 billion and $3.55 billion.

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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