VMware, Inc. (NYSE: VMW) is scheduled to release its fourth-quarter financial results after the closing bell on Monday, January 24, 2011. Analysts, on average, expect the company to report earnings of 44 cents per share on revenue of $803.54 million. In the year ago quarter, the company reported earnings of 31 cents per share on revenue of $608.20 million.
VMware, Inc. provides virtualization infrastructure software solutions and related support and services primarily in the United States. The Company’s suite of virtualization solutions addresses a range of information technology (IT) problems that include cost and operational inefficiencies, business continuity, software lifecycle management and desktop management. VMware, like many software companies, generates revenue primarily by selling new software licenses to its customers. When the license period expires, customers can sign up for maintenance and service contracts at a lower fee.
In the preceding third quarter, the Palo Alto, California-based company's net income was $84.6 million, or 20 cents a share, from $38.2 million, or 9 cents a share, in the year-earlier period. Revenue soared to $714.2 million from $489.8 million. Analysts, on average, expected the company to report earnings of 35 cents per share on revenue of $697.75 million.
For the fourth quarter of 2010, VMware expects total revenue to be in the range of $790.0 million to $810.0 million, reflecting an increase of 30.0% to 33.0% from $608.0 million reported in the fourth quarter of 2009.
For the first quarter 2011, management anticipates total revenue to decrease quarter over quarter due to cyclicality witnessed in enterprise software but increase about 25% year over year. VMware expects full year 2011 revenues to grow 20.0% from fiscal 2010 due to a slowdown in server shipment in 2011 as compared with 2010 and limited visibility. Non-GAAP operating margin in the first quarter of 2011 is expected to decline sequentially.
The company is benefiting from improving demand, customer wins and geographical expansion.VMware has a strong product pipeline and loyal customer base that will boost its profitability in the long term. The company’s virtualization platform – vSphere – addresses a range of information technology problems that include cost and operational inefficiencies, business continuity, software lifecycle management and desktop management. VMware works closely with over 900 technology partners, including server, microprocessor, storage, networking and software vendors.VMware competes with Microsoft (NASDAQ: MSFT) and Citrix (NASDAQ: CTXS) in the virtualization market, which it leads with around 45% share globally. vSphere allows companies to increase the utilization of their servers by allocating server resources to software applications independent of the underlying operating system required to execute the application. vSphere also makes it easier for IT managers to better manage various internal or external "clouds" or groups of virtualized server resources. Looking ahead, the company will focus on hybrid cloud opportunities, which blends private cloud infrastructure with public cloud services. VMware is well hedged against potential revenue disruptions in the U.S. as it generates approximately half of its revenue from its international customers. Its international revenue grew by 44 percent last quarter.
In terms of stock performance, VMware shares have gained nearly 103 percent over the past year.
Full Disclosure: None.
