VMware Continues Virtualization Market Romp

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VMware Wednesday posted better than expected results for the first quarter, reporting a 25 percent increase in sales as more customers move to virtualize mission critical applications.

The virtualization market leader reported a 52 percent increase in net income to $191.43 million on sales of $1.06 billion in the quarter. Earnings per share, excluding charges, were 66 cents per share. That compares with net income of $125.8 million on sales of $843.7 million in the year ago quarter.

[Related: VMware Memo Outlines View 5.1, Project Octopus Launch Plans]

The results were above Wall Street expectations of $1.03 billion in sales and earnings per share, excluding other expenses, of 60 cents per share. VMware shares were up $3.16, or 3 percent, to $114.45 in after-hours trading, approaching the 52-week high of $115.19.

VMware said license revenues for the quarter were $482 million, up 15 percent from the year-ago quarter. Service revenues, which include software maintenance and professional services, were up 35 percent to $573 million compared with the year-ago quarter.

“Whereas before it was considered somewhat avant-garde to virtualize your mission critical applications, it is rapidly becoming something where you are considered the exception if you are not going in that direction,” said VMware CEO Paul Maritz discussing the results with Wall Street analysts.

“We see all of our core customers now really aiming to get to very very high levels of virtualization way in excess of 50 percent, which is why we think we still have a lot of growth ahead of us just in terms of virtualizing applications -- both existing and new applications -- that are coming into the pool,” added Maritz.

NEXT: VMware CEO Maritz Sees Microsoft As Biggest Challenge

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