VMWare surprises for Q3 but cautions about future economic impact

VMWare surprised Wall Street with a better-than-expected quarter Tuesday but remained cautious because of the current business climate. (statement) Shares of the company, which closed down more than 9 percent in regular trading, rallied in after-hours trading and rose almost 25 percent.

VMWare surprised Wall Street with a better-than-expected quarter Tuesday but remained cautious because of the current business climate. (statement) Shares of the company, which closed down more than 9 percent in regular trading, rallied in after-hours trading and rose almost 25 percent.

The company reported revenue of $472 million, up from 32 percent from the same year-ago quarter. The company reported GAAP earnings of $83.3 million, or 21 cents per share, up from $67.7 million, or 18 cents per share, in the third quarter of last year.

Analysts said the expectations for the quarter were low so this was a nice boost for the company. Still, the company guided down its 2008 revenue forecast and declined to issue a 2009 growth forecast. It warned of "extreme reluctance" by businesses to invest in software, given the current economic climate. It also warned ahead that sales in the first quarter of 2009 could be lower than the current fourth quarter. Executives said the company's outlook is tied to the economy and that, as of now, things are just too uncertain. "It really is a case where just everybody is not sure what is going to happen," CEO Paul Maritz told Reuters.