Feeds

VMware revenues up 46%

But biz will cool in 2011

Build a business case: developing custom apps

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. ®

The essential guide to IT transformation

More from The Register

next story
Microsoft exits climate denier lobby group
ALEC will have to do without Redmond, it seems
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story

Whitepapers

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.
7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
BYOD's dark side: Data protection
An endpoint data protection solution that adds value to the user and the organization so it can protect itself from data loss as well as leverage corporate data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?