VMware, A $1 Billion-A-Year Company, Slips Below 2008 Expectations - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Software // Enterprise Applications
News
1/28/2008
07:20 PM
Connect Directly
Twitter
RSS
E-Mail
50%
50%

VMware, A $1 Billion-A-Year Company, Slips Below 2008 Expectations

The company's shares have more than quadrupled in value since the IPO, but the stock has dropped since November.

VMware on Monday said its revenue grew 80% over the year-earlier fourth quarter to $412 million, pushing VMware revenue above $1 billion in 2007 for the first time. Total revenue for the year came to $1.33 billion, an increase of 88% over 2006.

But the results fell short of Wall Street expectations, and led to a forecast of virtualization software revenue slowing down in 2008. VMware predicted it would increase revenue at a rate of 50% per quarter instead of 88%, a mark a little below Wall Street targets, according to financial reporting service Reuters.

"VMware executed at a remarkable pace in 2007. ... We begin 2008 with more than 100,000 customers, 500 technology and consulting partners," president and CEO Diane Greene said. "VMware's vision for the virtual data center is delivering tremendous value, ... and our product pipeline for 2008 promises to deliver much more."

VMware's stock was down 26% in trading for the day, closing at $83 per share. Parent company EMC's shares were down 11%, according to Reuters.

About 13% of the company was sold in an August IPO sponsored by EMC. The IPO started with a stock price of $29, which rose to $51 by the end of the first day, yielding $1 billion in capital for the company. VMware shares have more than quadrupled in value since the IPO, but the stock has dropped since November.

"If you miss your numbers in just your second quarter after going public, that suggests the stock was overhyped," Trip Chowdhry, an analyst at Global Equities Research, told Reuters.

"The story is not as perfect as investors believe. Oracle and Microsoft and Citrix have spoiled VMware's party. Not only that, VMware execution has been flawed. Instead of being a category, it will be relegated to being a product," Chowdhry said.

VMware said net profit in the fourth quarter was $78 million, or 19 cents per share, compared with $31 million, or 9 cents per share, a year earlier.

VMware's growth is now fueled by acquisition as well as new customers. In September it acquired Dunes Technologies, a virtual machine management software supplier, and this month it bought Thinstall, an application virtualizing software supplier.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Commentary
What Becomes of CFOs During Digital Transformation?
Joao-Pierre S. Ruth, Senior Writer,  2/4/2020
News
Fighting the Coronavirus with Analytics and GIS
Jessica Davis, Senior Editor, Enterprise Apps,  2/3/2020
Slideshows
IT Careers: 10 Job Skills in High Demand This Year
Cynthia Harvey, Freelance Journalist, InformationWeek,  2/3/2020
White Papers
Register for InformationWeek Newsletters
Video
Current Issue
IT 2020: A Look Ahead
Are you ready for the critical changes that will occur in 2020? We've compiled editor insights from the best of our network (Dark Reading, Data Center Knowledge, InformationWeek, ITPro Today and Network Computing) to deliver to you a look at the trends, technologies, and threats that are emerging in the coming year. Download it today!
Slideshows
Flash Poll