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VMware Earnings: Steady as She Goes

VMware's first quarter earnings were announced yesterday, and fit into the category of ho-hum; in a way, though, that's a good thing.

Overall revenue was about $470 million, up 7 percent from Q1 2008. Non-GAAP profits, at 25 cents a share, beat expectations by a bit. Any time expectations are exceeded in this recession is cause for cheer.

Additional good news came from a big boost in service revenues, up to 45 percent of total revenues from 33 percent a year ago. Those gains were offset, however, by a 13 percent decline in important license revenues. VMware chalked that up to "the challenging macroeconomic environment." No kidding. But it's worrying that those licenses, which represent a steady revenue stream, are drying up a bit.

The road ahead looks bumpy, too. VMware CFO Mark Peek said to expect Q2 revenues to be flat or down. What will be interesting to see is the company's guidance for the third and fourth quarters of 2009; it will be an indication of the expected uptake of vSphere.

Still, compared to the rest of the economy, there's not too much to be depressed about here; treatding water these days is like a solid revenue increase in a good, or even average, economic climate.

Posted by Keith Ward on 04/23/2009 at 12:48 PM


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