VMware Profit Tops Analysts’ Estimates on New Product Sales
April 19, 2011, 7:16 PM EDTBy Danielle Kucera
(Updates with full-year forecast in the sixth paragraph.)
April 19 (Bloomberg) -- VMware Inc., the biggest maker of programs that let computers run multiple operating systems, reported first-quarter profit that topped analysts’ estimates as it benefited from a foray into storage and desktop software.
Profit excluding certain costs was 48 cents a share, exceeding the 42-cent average of projections compiled by Bloomberg. Sales rose 33 percent to $843.7 million, the Palo Alto, California-based company said today in a statement. Analysts on average estimated $814.5 million. The company’s shares surged as much as 12 percent in extended trading.
Clients are using VMware software to turn more of their servers -- computers used to run websites and networks -- into multitasking machines that can operate several different applications, said Brian Freed, an analyst at Wunderlich Securities Inc. The company has been adding staff and spending more on research and development as it ramps up new businesses including security and storage.
“They released 18 new products last year, and here we are almost six months later,” Robert Breza, an analyst at RBC Capital Markets in Minneapolis, said in an interview. “You’re starting to see the new products penetrate the customer base.”
VMware, majority-owned by EMC Corp., climbed as high as $96 in late trading after the earnings report. The shares fell 53 cents to $85.97 at 4 p.m. in New York Stock Exchange composite trading. The stock has declined 3.3 percent this year.
Sales Forecasts
Sales in the second quarter will be $860 million to $880 million, the company said. That’s greater than the $846.6 million average estimate of analysts. VMware expects full-year 2011 revenue to be $3.55 billion to $3.65 billion.
First-quarter net income rose 60 percent to $125.8 million, or 29 cents a share, from $78.4 million, or 19 cents, a year earlier.
VMware has added almost 400 employees since the beginning of the year and will keep hiring at a “brisk pace” throughout 2011, Chief Financial Officer Mark Peek said on a conference call. The company will continue to invest to take advantage of “a lot of very strong long-term growth opportunities,” he said.
--Editors: Jillian Ward, Tom Giles
To contact the reporter on this story: Danielle Kucera in New York at dkucera6@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
