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VMware Coming Back Along with the Economy

It has $2.2 billion in the bank, up 29%, after spending $356 million to buy SpringSource

VMware, the acknowledged leader in virtualization, came in with third-quarter revenues of $490 million, up 4% year-over-year, beating estimates of around $474 million.

The recession has really crimped VMware’s style. This time last year its revenues were up 32% year-over-year to $472 million and that wasn’t even its personal best.


VMware CTO Steve Herrod keynoting SYS-CON's Virtualization Conference & Expo (2008)

However, showing a bit of its old flair it figures it’s good for between $540 and $560 million this quarter, with the first quarter down again sequentially. It’s supposed to release VMware View 4 for the desktop this quarter.

The pundits figured it could see $523 million in Q4.

The company earned $38 million, or nine cents a share (GAAP) in Q3 off 54%. On a non-GAAP basis that comes to $95 million, or 24 cents a share against Street estimates of 20 cents.

US revenues declined 1% in the third quarter to $246 million. International revenues were up 9% to $244 million. Services revenues, including software maintenance and professional services, were up 33% to $250 million.

Still CFO Mark Peek described the quarter as being “driven by strength in the US federal sector, increased transaction volumes and particularly robust growth in our maintenance renewals.” And “while the economic environment remains challenging, we have improved visibility into our business” – Peek has fretted about visibility for months now – “and believe that the next two quarters will follow seasonal patterns.”

It has $2.2 billion in the bank, up 29%, after spending $356 million to buy SpringSource.

Total deferred revenues came to $990 million, up 27%.

VMware said its non-GAAP operating income in the third quarter was $109 million, down 5%. GAAP operating income was down 77% to $23 million.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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