Feeds

VMware squeezes customers for stellar quarter

But where are the new punters, Pat?

Boost IT visibility and business value

Despite a wave of executive departures, questions over its ability to make money arming cloud vendors, and a dismal economy at home and abroad, VMware has reported a solid set of financial results, though slow growth in software licensing points to storms ahead.

The virtualization company reported combined revenues of $1.24bn on Wednesday for its second quarter 2013 earnings, up 10.6 per cent on the $1.12bn in the same quarter a year ago. Growth in this figure came mostly from services rather than licensing, which to El Reg​'s patent-pending earnings analyzer indicates difficulty in coaxing new customers into the fold.

Software licenses crept up a mere 2.5 per cent to $530.5m, compared with $517.2m in the same quarter a year ago, and $488.2m in the first quarter. Better growth was found in services, which broadly represents revenue from support contracts, and which grew 17.6 per cent to $712.6m.

This climb let the company report a net income of $244.1m, up a whopping 27 per cent on Q2 2012's $191.7m, and significantly up on the previous quarter's $176m.

The high income was paired with greater spending on sales and marketing – $442m versus $391m in the year-ago quarter – indicating to us a company fighting to maintain existing customers and spending more than ever on courting new ones. But with the lax license growth we see little evidence of a flood of VMware converts, and instead sense greater sell-ins to existing customers and renewals by longtime VMware shops.

Though some of the figures point to difficulties ahead, the company beat estimates by Wall Street bean counters, who had expected revenues of $1.23bn and an EPS of $0.77 versus VMware's $0.79.

"The second quarter was a strong finish to a solid first half of 2013 for VMware," VMware's chief executive officer, Pat Gelsinger, said in a canned quote. "We see a significant market opportunity in the second half of 2013 and beyond."

Though VMware has done much to prepare itself for the changes in the IT industry being brought about by broader adoption of cloud services and cloud licensing models, much is uncertain.

To attain mega success, the company will need to get its strategically important Hybrid Cloud Service software into major IT providers. Given the lack of information on this nebulous service since its launch in May and the subdued performance of its predecessor, vCloud Director, we have no information to use when judging how VMware is faring in clouds already dominated by Microsoft and Amazon.

Gelsinger & Co will also need to retain key executives, which may be difficult, judging by the recent departures of a number of top execs – including cloud king Bogomil Balkansky – who were apparently unable to leap the wall into EMC, VMware, and General Electric's sexy new joint venture, GoPivotal.  ®

Maximizing your infrastructure through virtualization

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
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.
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.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.