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VMware Delivers Real Financial Results for Virtualization Business

By Sean Kerner (Send Email)
Posted January 24, 2012


Virtualization is a growing business for VMware (NYSE:VMW). The virtualization vendor reported fourth quarter 2011 and full-year results on Monday that continue to show growth. Moving forward, CEO Paul Maritz has big plans for 2012, with a broader vision of virtualization.

For the fourth quarter, VMware reported revenues of $1.06 billion, which is a 27 percent year-over-year gain. For the full fiscal 2011 year, revenues came in at $3.77 billion, which is a 32 percent year-over-year gain. Net income for the fourth quarter was reported at $200 million or $0.46 per share. For the full year, net income was $724 million or $1.68 per share.

Moving forward, Mark Peek, CFO of VMware, provided first quarter 2012 guidance for revenues to grow between 20 and 23 percent. For the full fiscal 2012 year, Peek provided guidance for revenues in the range of 4.475 billion or $4.6 billion, or growth of 19 percent to 22 percent on a year-over-year basis.

While VMware is perhaps best known for its virtualization offerings, Paul Maritz, CEO of VMware, noted that customers now want more than just virtualization.

"They are looking for ways to become fundamentally more agile and efficient and transform their businesses," Maritz said during the company's earnings call. "2012 will be the year when we expect our customers to accelerate beyond virtualization in significant numbers and start operating in a cloud-like manner."

Maritz explained that the growing opportunity for VMware is to not only sell virtualization, but also to sell the adjacencies around that. That is, the other capabilities people need for IT transformation.

"It's for that reason that we have, in addition to vSphere, created these product lines around management and automation around end-user computing and around the application platform," Martiz said. "And those businesses or those product lines are growing at a faster rate than our core vSphere business, and we expect to see that continue."

Overall, VMware has a three-pronged strategy for its business that consists of a cloud infrastructure, application platform capabilities for new and renewed applications, and client management capabilities for the post-PC era.

"In the dimension of cloud infrastructure, we continue to not only make fundamental enhancements in vSphere but are pushing to deliver a full cloud infrastructure suite, including management, disaster recovery and security, delivered via private or public clouds," Maritz said. "In the dimension of the application platform, 2012 was a record year for our vFabric family, growing strongly, albeit off a small base."

In the area of end-user provisioning, VMware's View 5.0, which is a Virtual Desktop Infrastructure (VDI) solution was released in 2011, which Maritz said was well received by customers.

From a competitive perspective, Maritz isn't too worried about the landscape either.

"Of course, we're expecting a release by Microsoft of their Hyper-V 3 Windows 8 product in the latter part of this year, and we expect them to come back at us again," Maritz said. "We're prepared for that and in the past, we've been able to turn our crank faster than Microsoft can turn theirs and we're hoping that, that will stand us in good stead in the future."

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals. Follow him on Twitter @TechJournalist

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