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5/27/2009
02:31 PM
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VMware Invests $20 Million In Terremark Cloud Services

The virtualization giant will own 5% of Terremark, which produces cloud and managed IT services for large companies and government agencies.

A sign of VMware's view of the future is on display as it buys a 5% stake in Terremark, a $20 million investment in cloud computing's future. It paid $5 a share for 4 million shares of newly issued common stock.

Terremark's chairman, Manuel Medina, welcomed the move. "VMware is the recognized leader in virtualization and a driving force behind the evolution of cloud computing," he said in an announcement.

Dan Chu, VP of emerging products at VMware, said in the announcement that the two companies have been working together for several years and Terremark was an effective implementer of VMware's products. "This investment ... underscores our belief in their ability to leverage our technologies as part of the VMware vCloud initiative."

VMware announced its vCloud initiative at its VMworld user group meeting in Las Vegas last September. It takes the data center operating system that VMware is seeking to create through its vSphere 4 suite of products and applies additional APIs and services to federate internal cloud resources with external clouds.

Terremark produces cloud and managed IT services through its data centers in the United States, Europe, and Latin America. It reported results for its fourth quarter ended March 31 and for fiscal 2009 on Tuesday. Revenue was $68.9 million, up 5% over the same period the year before. Income from fourth-quarter operations was $10.8 million, a 63% increase over the same period the year before.

Revenue for the year was $250.5 million, a 34% increase over the year before. Gross profit margins were 46% for the year. It delivered record bookings of $31.8 million for the quarter ended March 31, according to CFO Jose Segrera.

Both large companies and government agencies are using its services, Medina said. In February, Terremark announced that the General Services Administration had selected it to power USA.gov, the federal government's official Web portal, and a Spanish-language companion portal. In January, it added "burstmode" for enterprise workloads, giving customers additional power in the cloud as needed. The company had 1,100 customers at the end of its fiscal year.


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