VMware Dominating the Virtualization Market
In an era pushing for more GREEN cost cutting measures, VMware now dominates the virtualization market. The software is seen as the ideal solution to cut hardware costs and reduce electricity bills for I.T. data centers.
IPO-darling VMware handily beat analysts’ expectations in its first quarter as a public company, tripling profits. And though investors had already priced a powerful quarter into VMware’s lofty share price, which has more than tripled since the software company’s initial public offering in August, the stock surged 5% after the report.
VMware (VMW), which makes “virtualization” software that helps companies pile the work of multiple computer servers onto a single machine, nearly doubled its third-quarter revenue compared with a year ago, generating sales of $358 million. Orders for new software licenses, a key measure of future revenues, also nearly doubled, to $248 million.
Third-quarter net income totaled $64.7 million, or 18¢ per share. Wall Street’s consensus estimate was that VMware would earn 17¢ per share on $334 million in revenues, but the unofficial “whisper” estimate had investors looking for $355 million to $360 million in sales. As such, the results managed to vault the especially high hurdle analysts had set in advance of the Oct. 24 report. Investors bid up VMware shares in after-hours trading following the update, though some of that gain may have been driven by short-sellers forced to cover their positions after betting the company wouldn’t meet the market’s outsize expectations.
