VMware Disappoints Now & Ahead (VMW)

Posted: July 22, 2008 at 3:21 pm

Vmware_logo_2We just got earnings out of virtualization leader VMware, Inc. (NYSE: VMW).  The company posted $0.23 non-GAAP EPS and a 43% yr/yr revenue gain to $456 million in revenues.   First Call had estimates pegged at $0.23 EPS on $458.6 million in revenues.   

Third quarter 2008 revenues are targeted to be within a range of $462to $468 million, but estimates for Q3-2008 are $0.25 EPS on $497.3million.  It said that 2008 revenues are targeted to grow approximately42% to 45% compared to 2007, which implies $1.9 Billion at themid-point of its expectations.  Estimates for fiscal December-2008 are$1.02 EPS on $1.96 Billion in revenues. Cash exceeded $1.5 billion anddeferred revenue was $721 million as of June 30.

Shares closed up 2.79% at $37.97, and the after-hours reaction hasshares down all the way to $33.50 or so.  If this holds it will markits lows since coming public.  This doesn’t look strong enough for anindustry leader and now you have to wonder if some of thosevirtualization multi-billion industrywide estimates for years 2010 andbeyond will have to come down or not.

Jon C. Ogg
July 22, 2008

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