VMware Profits Down, But Revenue Up, Growing
The growth of VMware, which is the leading vendor of server virtualization technology, comes as sales of physical servers continue to fall. However, the recent release of Microsoft's Windows Server 2008 with its integrated Hyper-V server virtualization technology could impact VMware's sales, although it is still too early to say by how much.
VMware on Monday said that revenue for its third quarter, which ended Sept. 30, was $490 million. This was up 4 percent over the $472 million the company reported during the third quarter of 2008.
Third-quarter revenue included about $240 million in license sales and $249 million in sales of professional services. However, while VMware's services revenue rose a hefty 33 percent over last year, its license revenue actually fell nearly 16 percent over last year, which could have an impact on future performance.
VMware also reported income in the third quarter of $38 million, or 9 cents per share, down 54 percent from the $83 million, or 21 cents per share, it reported last year.
VMware's U.S. revenue in the third quarter fell 1 percent to $246 million from the third quarter of 2008, while international revenue grew 9 percent to $244 million during the same period.
Mark Peek, VMware CFO, said in a statement that the company's third-quarter results were driven by strength in its U.S. federal government business and by robust growth in maintenance renewals.
Looking ahead, Peek said that the economic environment remains challenging, but that VMware expects fourth-quarter revenue of between $540 million and $560 million, with revenue in the first quarter of 2010 to fall sequentially from the fourth quarter.
This represents continued growth for VMware, which reported revenue of $515 million in the fourth quarter of 2008. First-quarter 2009 revenue was $470.3 million.