VMware earnings shine, benefit from 'pent up customer demand'

VMware cruised past Wall Street estimates with a first quarter that illustrated strong growth prospects.

The virtualization software company reported net income of $78 million, or 19 cents a share, on revenue of $634 million, up 35 percent from a year ago. Non-GAAP earnings were 32 cents a share.

Wall Street was expecting VMware to report earnings of 27 cents a share on revenue of $592 million.

In a statement, VMware CFO Mark Peak said the company was benefiting from "pent up customer demand, carried over from last quarter, as well as a strong performance in Europe, China and Japan." That demand picture is expected to continue. VMware projected second quarter revenue of $635 million and $655 million. That outlook includes revenue from Zimbra, which was acquired from Yahoo, and assets acquired from EMC, notably the Ionix IT management business. Wall Street was expecting revenue of $607 million for the second quarter.

For 2010, VMware projected revenue of $2.62 billion and $2.72 billion, up 30 percent to 35 percent from 2009. Wall Street was expecting revenue of $2.52 billion.

VMware ended the quarter with $2.8 billion in cash and equivalents.