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VMware Sees Sharp Profit Rise

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VMware’s 67 percent profit rise reflects an overall growth in virtualisation and the cloud

VMware posted quarterly net income of $200 million (46 cents per share) – up from $120 million (£77m, or 28 cents per share), in the same period a year earlier.

VMware, the world’s largest virtualisation software and services provider, popped open at least a few people’s eyes on 23 January when it announced a whopping 67 percent year-over-year net income increase in its fourth-quarter 2011 earnings report.

High overhead

Continued growth in service and licence revenue to go with larger profit margins helped VMware post quarterly net income of $200 million (46 cents per share) – up from $120 million (28 cents per share), in the same period a year earlier.

Overhead for its business remains high, however. Total revenue was reported at $1.06 billion, which was up 27 percent from Q4 2010.

Hot-selling products and services that fit into the cloud computing category, led by the company’s vCenter and vSphere management platforms, were the main reasons for the sales increases.

In the conference call to reporters and analysts, chief executive Paul Maritz and CFO Mark Peek both mentioned three Q4 product releases – vCenter Operations, vFabric Application Management and the IT Business Management suites – as keys to the company’s steady financial upward climb.

The company – which did its part for the overall US IT economy by adding 2,000 employees in 2011, 600 of whom from acquisitions – is placing more of its strategic emphasis into the cloud-building sector, and its earnings reports mirror the overall growth of the cloud sector. VMware’s hypervisor and tools work with virtually all other hardware and software makers’ products.

VMware’s common stock closed at an even $86.00 but had jumped 5 percent to $90.35 in after-hours trading on 23 January.