VMware's fourth quarter solid; Outlook fuzzy
VMware's fourth quarter performed well amid the economic meltdown, but the outlook for future quarters is unclear.
The company on Monday reported net income of $111 million, or 29 cents a share, on revenue of $515 million (statement). Excluding items, VMware's net income was $142 million, or 36 cents a share. Wall Street was expecting earnings of 26 cents a share. In the year ago quarter, VMware reported net income of $78 million, or 19 cents a share, on revenue of $412.5 million.
For 2008, VMware reported net income of $290 million, or 73 cents a share, on revenue of $1.9 billion, up 42 percent from a year ago.
VMware's results may indicate that virtualization is a recession resistant technology. In the current earnings season, technology companies that offer products and services that deliver returns and cut costs are standing out. IBM (outsourcing and services), Riverbed (WAN optimization) and now VMware (virtualization) are delivering solid quarters.
As for the outlook, VMware projected first quarter revenue of about $475 million. Wall Street was expecting revenue of $496 million. Other than the tax rate, VMware was mum about the outlook for 2009. The company said in a statement:
Current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that VMware’s actual results could differ materially from expectations. Because of this uncertainty, VMware is not providing revenue guidance for the full year 2009.
By the numbers:
- VMware had cash of $1.8 billion at the end of the year;
- Deferred revenue as of Dec. 31 was $870 million.
- License revenue in the fourth quarter was $314.8 million with services revenue of $199.7 million.
- Research and development spending for the fourth quarter was $110.5 million, up from $91.6 million a year ago. For the year, R&D spending was $429 million, up from $285.9 million in 2007.
