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Tuesday, July 31, 2012

VMware Earnings Review: Performance Downtrend Evident


VMware reported QE June 2012 financial results on Monday, July 23

New CEO Pat Gelsinger has a financial performance downtrend to contend with. Earnings per share growth year over year has decreased 4 consecutive quarters and is now -14% for this latest QE June 2012. This is the first EPS YoY decrease since the QE 12-31-09. Total revenues growth year over year has decreased 4 consecutive quarters and is now +22%, which is still respectable, but is also the lowest since the QE 12-31-09 (+18%).

Result, QoQ Change, YoY Change
Total Assets: $9.50 billion, +4%, +26%
Total Revenues: $1.12 billion, +6%, +22%
Net Income: $191.75 million, 0%, -13%
Earnings per Share: $0.44, 0%, -14%

QE September 2012 guidance for total revenues is a sub par -1% to +3% QoQ and +18% to +22% YoY. The 10-quarter YoY average has been +34%. Full 2012 guidance for total revenues is +20% to +23% YoY, which was raised at the preliminary financial results call last week.

VMware also announced the acquisition of Nicira, Inc., a pioneer in software-defined networking (SDN) and a leader in network virtualization for open source initiatives.











“The quarter’s strong performance reflects the continued confidence customers have in our solutions,” said Paul Maritz, chief executive officer, VMware. “Our products, amplified by the recent acquisitions, including Nicira, are providing the means for our customers to transform IT as we move into the Cloud Era.”

“We are very pleased with our second quarter results,” said Carl Eschenbach, chief operating officer, VMware. “Despite the tough market conditions, we achieved record quarterly results in total revenue, license revenue, and non-GAAP operating income. Third quarter 2012 revenues are expected to be in the range of $1.11 and $1.15 billion. Annual 2012 revenues are expected to be in the range of $4.540 and $4.635 billion, an increase of 20.5% to 23.0% from 2011. Annual license revenues are expected to grow between 11% and 15%.”

VMware to Acquire Nicira

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