VMware Reports Revenue Growth for Quarter, Year

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.