VMware gets some mojo

Posted Jul 23rd 2009 10:20AM by Tom Taulli
Filed under: Earnings Reports, Technology

For the past decade, VMware (NYSE: VMW) has been one of the fastest-growing software companies in the world. Unfortunately, things have slowed down recently.

According to the Q2 numbers, the revenues came to $456 million, which showed no growth over the past year. The drag came from US market, where sales were down 3%.

VMware's earnings were $32.5 million, which compares to $52.3 million in the same period a year ago.

Despite the sluggishness, VMware was able to beat expectations. The fact remains that – despite the recession – the company has sticky applications -- the company develops virtualization software, which boosts the performance of existing information technology assets -- which produce significant cash flows. For example, operating cash flows came to $233 million in the quarter, up 19% over the past year. VMware has about $2.3 billion in the bank.

Plus, VMware is in the middle of a major product launch, vSphere. The software is getting lots of traction – with about 250,000 downloads so far. Hopefully, this should lead to higher license revenues, which would certainly boost growth. Q3 revenues are expected to range from $465 million to $480 million.

And Wall Street likes what it sees so far. In early trading today, VMware's shares are up 6.30% to $33.22.

Tom Taulli is the author of various books, including The Complete M&A Handbook, You can reach him at his personal blog.

Tags: inthenews, vmw, VMware