Feeds

VMware revenues up 46%

But biz will cool in 2011

Boost IT visibility and business value

No market can grow like crazy forever, and that applies to VMware as much as anyone else. In the third quarter, the server virtualization juggernaut had $714.2m in overall revenues, up 45.8 per cent, and net income more than doubled to $84.6m. But there may be rockier times ahead.

Mark Peek, VMware's chief financial officer, said in a call with Wall Street analysts that 2011 will be a much tougher compare than 2010 was - given the effect the Great Recession had on real and fake servers - and that the prognosticators at the company believe that the server upgrade cycle that VMware is dependent upon will taper off next year.

Given that, Peek said that VMware is projecting it can grow at least 20 per cent in 2011, compared to the 39 per cent growth rate the company expects to close for 2010 if it hits its revenue targets in the fourth quarter. While Peek downplayed the link between physical server shipments and virtual machine hypervisor shipments, there is obviously, over the long haul, a link. Some might say a causal link.

In the third quarter ended September 30, VMware's license revenues rose by 42.9 per cent, to $343.2m, while services revenues (which include both product support and professional services) jumped by 48.7 per cent, to $371m. The company exited the quarter with $2.9bn in cash, up $100m and not more thanks to acquisitions, and had $1.5bn in deferred revenues, up 52 per cent compared to a year ago. Sales may be slowing, but it would be hard to find a company in a better position to deal with any adverse conditions that it might encounter in the coming year.

Peek said in the call that business with the U.S. government, which is in the midst of virtualizing its infrastructure, was very strong. He added that the Essentials Plus variant of the vSphere server virtualization stack (which now has VMotion live migration capabilities with the 4.1 release) helped boost sales in the quarter, while at the same time the Enterprise Editions (which have more bells and whistles) had "strong demand." Peek called out the United Kingdom and Germany as doing comparatively better in Europe during Q3, and said the company is seeing "significant progress" in Eastern Europe and Russia.

Peek said that enterprise license agreements - a trick that VMware picked up from Microsoft - accounted for 20 per cent of total bookings in Q3, and that in general, people are renewing their contracts at more than 100 per cent of the value of their original contracts and usually with a three-year maintenance contract tied to it.

Looking ahead to Q4, Peek said VMware was anticipating sales of between $790m and $810m, which would be a growth rate ranging from between 30 and 33 per cent.

VMware's chief operating officer, Tod Nielsen, said that VMware's aspirations in the virtual desktop infrastructure (VDI) racket are gaining steam, and the well-known auto parts manufacturer (which he would not name) booked a seven-figure VDI deal in the quarter for 6,000 virtual seats. ®

Build a business case: developing custom apps

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
Netflix swallows yet another bitter pill, inks peering deal with TWC
Net neutrality crusader once again pays up for priority access
Judge nixes HP deal for director amnesty after $8.8bn Autonomy snafu
Lawyers will have to earn their keep the hard way, says court
Ex-IBM CEO John Akers dies at 79
An era disrupted by the advent of the PC
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.