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Thursday, 23 April 2009 14:55

VMware bucks downturn in first quarter

VMware has stood up well against the economic tsunami sweeping the world with its revenues for the first quarter this year, compared to the same quarter in 2008, increasing by seven percent to US$470.3 million.

Releasing first quarter ’09 results today, VMware reported GAAP operating income for the quarter of US86.9 million which was a massive 80% increase on operating income in the first quarter last year. In addition, non-GAAP income for the quarter was US$121.0 million, an increase of 14% over the first quarter of 2008.

Of the total revenues there was a reasonably even split between the US market and VMware’s global business. The US market delivered US$244.01million, a first quarter increase of eight percent over the same quarter last year, while international revenues grew six percent to US$226.2 million compared to the first quarter in 2008.

Paul Maritz, president and chief executive officer of VMware said that in an environment where customers were reducing IT purchases in order to preserve cash, the company had “successfully managed costs while continuing to make strategic investments in our products.”

“We delivered solid results for the first quarter despite a very challenging economic climate. Customers continued to adopt the VMware platform as a strategic investment that delivers substantial cost savings and improved efficiency and flexibility for their business.”

Maritz said that just yesterday VMware had launched vSphere 4, which he claimed was the industry’s first operating system for building the internal cloud. 

According to Maritz, vSphere delivers “efficient, flexible and reliable IT as a service,” and he added, “leveraging vSphere 4, customers can take pragmatic steps to achieve cloud computing within their own IT environments.”

“With these “internal” clouds, IT departments will be able to dramatically simplify how computing is delivered in order to help decrease cost and increase flexibility, enabling IT to respond more rapidly to changing business requirements, claimed Maritz.

And, according to Maritz, with this announcement, “VMware is once again redefining the scope and value of virtualization for our customers. This substantial new platform brings the benefits of cloud computing to the enterprise in an evolutionary and non-disruptive way– delivering uncompromising control with greater efficiency while preserving customer choice.”

VMware also reported first quarter services revenues of US$213.3 million, a 48% increase from last year, with Maritz commenting that the company’s business mix continues to shift, with services revenues becoming a larger proportion of total revenues.

“In the first quarter, services revenues were 45% of total revenues compared to 33% a year ago, and driven by the challenging macroeconomic environment, license revenues were US$257.0 million, a decline of 13% from a year ago.”

VMware’s chief financial officer, Mark Peek, said  operational execution had resulted in strong cash flow, and enabled the company to “continue to make the strategic investments needed to grow our business.”

However, due to the tough economic conditions, Peek said he expect customers would continue to keep a very tight rein on their IT spending, particularly new investments.

“Also during this quarter, we and our extensive ecosystem of partners will begin the transition to VMware vSphere 4. As a result, we expect our second quarter revenues will be flat, or even down, compared to the second quarter of 2008,” Peek cautioned.


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