vSphere Spurs VMware to Sharply Improved Profit in Q4

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 J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...