VMware Revenue Up, but Forecast and Profits Down

By Chris Preimesberger  |  Posted 2012-10-23

Virtualization software maker VMware filed its third-quarter 2012 earnings report Oct. 23, showing solidly increased revenue but also profit margins that dropped slightly

While the key numbers exceeded Wall Street estimates, the company also said it expects a slowing of revenue growth over the next few months.

Revenue rose 20 percent to $1.13 billion from $942 million. Overall, the company earned 70 cents per share for its investors in the third quarter. A poll of analysts had forecast $1.13 billion in revenue and earnings of 63 cents per share.

Net profit fell to $157 million (36 cents per share) from $178 million (41 cents per share) in the same quarter in 2011.

VMware, whose 2-year-old vSphere cloud management platform is quickly becoming one of its mainstay products, revealed stronger-than-expected sales to the U.S. government, which is slowly turning its legacy data centers into cloud-service centers. However, the company's  current-quarter revenue forecast came in below Wall Street expectations.

VMware, owned by storage giant EMC, predicted Q4 2012 revenue of $1.26 billion to $1.29 billion, compared with analysts' expectations of $1.28 billion, according to a panel of Thomson Reuters-affiliated analysts.

The EMC-owned company also introduced a new chief financial officer, Jonathan Chadwick, who previously worked as a Microsoft corporate vice president and, before that, as the CFO of Skype.

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