VMware boosted by Q4 numbers but cautious on outlook


VMware boosted by Q4 numbers but cautious on outlook

Microscope contributor

Virtualisation heavyweight VMware pushed up sales and more than doubled profits in Q4 as delayed corporate and mid-market activity came back online.

Revenues for the period ended 31 December grew 37% to $836m (£529m) and profits hit $120m (£76m) compared to $56m a year earlier,

Spending in the industry staged a dramatic come back compared to 2009, said VMware chief financial officer Mark Peek.

"We experienced the strongest Q4 budget flush we have seen since going public in 2007," he told financial analyst on a conference call last night.

Included in the sales figures, Enterprise License Agreements went up 39% to $422m against a strong Q4 in 2009 as it fought off competition from rivals to renew three-year deals signed in 2007.

"Despite determined competitive efforts to prevent ELA renewals, so far 80% have renewed or entered into a new ELA, and only 3% of customers terminated agreements, and we believe most of these were not for a competitive switch."

Moving into 2011, VMware warned "the renewal pipeline will be commensurate with our business three years ago" when the recession started to bite.

Turnover from services increased 36% to $413m including an 18% rise in Professional services revenues.

The overall sales gain was balanced, the firm said, with a 39% year-on-year rise in the US to $439m and a 35% increase internationally.

For the year, sales grew 41% to $2.9bn and profits soared 81% to $357m, with Peek hailing 2010 as a "tremendous year" for the company.

"We are also cognisant that we, along with the industry, benefited from pent-up demand from slower spending in 2009 and significantly higher serer shipments during 2010," he said.

"In 2011, we won't have these advantages, likewise we remain cautious about the macroeconomic environment and the volatility we are observing in the world economy and individual sovereign nations," Peek added.

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