VMware Doesn’t Repeat Prior Disappointment (VMW, EMC)

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VMware Inc. (NYSE: VMW) decided not to make a repeat of last quarter’s earnings disappointments.  The king of virtualization posted net income of $43 million on $438 million in revenues. Reported EPS was $0.11 net, but $0.22 from an operational EPS basis.

Second quarter 2008 revenues are expected to increase approximately 55% compared to the second quarter of 2007, which would translate to roughly $458.5 million; First Call has estimates of $422.3 million.

VMware said that it als "continues to expect" 2008 revenue growth of approximately 50% over 2007, which translates to $1.988 Billion; First Call has estimates at $1.99 Billion.

Diane Greene, CEO, sums it up easily, "….We are seeing customers progress more rapidly through the virtualization adoption path; many are now moving right into a VMware-based architecture…."

Shares have rallied 12% in after-hours to $65.00, which is partly helped by the 3.22 million shares (listed as 32% of the free float, although that may be wrong after lock-up and employee dilution).  As a reminder, shares of the parent, EMC Corp. (NYSE: EMC), are set to report earnings tomorrow morning before the open.

Jon C. Ogg
April 22, 2008

Jon Ogg is a producer of and editor for both the Special Situations newsletter and the "10 Stocks Under $10" weekly newsletter for 247WallSt.com; he can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.