VMware Reports Revenue Growth for Quarter, Year

By Jessica Davis  |  Print this article Print


Desktop-as-a-Service Designed for Any Cloud ? Nutanix Frame

Virtualization giant VMware reported higher revenue for the fourth quarter and the full year as businesses sought to save money through server consolidation and virtualization. VMware is forecasting strong growth for the coming year as it puts its focus on enabling private clouds, desktop virtualization and integrating acquisitions SpringSource and Zimbra.

Virtualization giant VMware’s (NYSE:VMW) focus for 2010 will be to "strengthen and widen" its private cloud value proposition for customers at the same time it invests in strengthening desktop virtualization offerings to help customers get the full value from that private cloud.

That was the message from VMware CEO Paul Maritz speaking to analysts during the company’s fourth-quarter earnings call on Jan. 25. He attributed much of the strength of VMware’s performance to the fact that customers have found they can save money by implementing virtualization technology.

Indeed, VMware registered growth in a year when many other technology vendors were floundering amid a deep recession. The virtualization vendor reported fourth-quarter revenues of $608 million, an 18 percent increase year over year, and full-year revenues of $2 billion, an 8 percent year-over-year increase.

"We are pleased with how we weathered 2009 and although license revenue declined 13 percent during the year, we achieved 8 percent growth and significantly increased our deferred revenue and cash," CFO Mark Peek told analysts.

And VMware expects 2010 to unfold as another strong year, forecasting total Q1 revenue in a range of $580 million and $600 million. For the full-year 2010, VMware is forecasting total revenue of between $2.45 billion and $2.55 billion, or growth of 21 percent to 26 percent.

VMware executives said the acquisitions of SpringSource and the recently announced Zimbra would add to the value the company could offer to end customers and partners.

VMware's Zimbra acquisition could threaten Microsoft Exchange dominance.

"While keeping and enhancing [SpringSource] as an open framework targeting multiple environments, we expect to see new products that specifically integrate Spring and vSphere appear in 2010," Maritz told analysts.

"We are now in the process of taking another complementary move with the acquisition of Zimbra," he added. VMware announced plans to acquire the open-source e-mail and collaboration software suite earlier this month. "We believe that Zimbra has the right underpinnings to be offered as a scalable solution either on-premises or through our service provider partners as a cloud-based solution."

VMware reported net income for Q4 of $56 million, or 14 cents per diluted share, compared with $111 million, or 29 cents per diluted share, for Q4 2008. Non-GAAP net income for Q4 2009 was $127 million, or 31 cents per diluted share, compared with $142 million, or 36 cents per diluted share, for Q4 2008.

For the year, VMware reported net income of $197 million, or 49 cents per diluted share, compared with $290 million, or 73 cents per diluted share, for 2008. Non-GAAP net income for 2009 was $401 million, or $1.00 per diluted share, compared with $416 million, or $1.05 per diluted share, for 2008.

VMware executives noted during the call that in the second half of the fiscal year the company added 20,000 customers and 3,000 partners.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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