VMware earnings shine: Customers 'move forward' on IT spending

VMware's fourth quarter handily topped expectations as the company saw strong demand for its vSphere virtualization platform. Meanwhile, the company said customers are beginning to spend more money and raised its first quarter revenue outlook.

The company reported net income of $56 million, or 14 cents a share, on revenue of $608 million, up 18 percent from a year ago (statement). Non-GAAP net income was $127 million, or 31 cents a share. Wall Street was expecting earnings of 26 cents a share on revenue of $553.8 million.

For fiscal 2009, VMware reported net income of $197 million, or 49 cents a share, on revenue of $2 billion, up 8 percent from a year ago.

In a statement, VMware CEO Paul Maritz said:

The quarter's strong performance, anchored by demand for vSphere, signals that virtualization is a key technology for customers who need to save money today, yet invest in a strategy that is central to the emerging cloud computing model.

The outlook for VMware was also solid. VMware CFO Mark Peek said:

While the economy is slowly recovering, we have improved near-term visibility as customers move forward with their IT investments.

The company projected first quarter sales to be between $580 million and $600 million, or up 23 percent to 28 percent from a year ago. Wall Street was expecting revenue of $530.5 million. Note that VMware just acquired Zimbra, which is contributing some revenue going forward.

For 2010, VMware is projecting revenue between $2.45 and $2.55 billion, an increase of 21 percent to 26 percent from 2009. Wall Street was expecting $2.28 billion.