News: VMware's Results Ease Concerns

Threats from virt competitors keep outlook cautious for VMware moving forward

On the virtualization street, VMware Inc.'s financials are watched as closely as Americans watch "American Idol."

That's why there was much hand-wringing last year, when VMware's Q4 results were underwhelming. But the numbers got back on track with reported Q1 revenues at $438 million, representing a 69 percent year-over-year improvement, easing investor concerns.

Profits were strong, and the company said it expected growth to continue into the next quarter. License revenue grew 73 percent to $294 million, while service revenue increased 62 percent to $144 million.

Revenues were driven by continued momentum in the company's four major market areas: desktop, data center, automation and management, and security.

They included both license revenue as well as substantial income from support, subscription and professional services. The company cited agreements with major hardware vendors to embed the ESXi hypervisor on their servers as a positive development contributing to the rosier picture.

VMware says first-quarter U.S. revenues grew on increased demand from both large enterprises and other segments. International revenues also contributed, driven in part by growth in Australia, Brazil, Russia, India and China.

Not all is roses, however. Some analysts have suggested that VMware's future success is threatened by pricing pressure and embedded or zero-cost solutions from companies such as Microsoft, Virtual Iron Software Inc., Citrix Systems Inc. and Novell Inc.

About the Author

Tom Valovic is a freelance technology writer.