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VMware profit beats estimates, names new CFO

Reuters News
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Posted: Oct 23, 2012 4:45 PM
VMware profit beats estimates, names new CFO

(Reuters) - Software maker VMware Inc's <VMW.N> third-quarter profit beat estimates on stronger-than-expected sales to the U.S. government, but it forecast current-quarter revenue in a range largely below expectations.

VMware also named Jonathan Chadwick as its new chief financial officer on Tuesday. Chadwick has previously served as Microsoft Corp's <MSFT.O> corporate vice president and as the CFO of Skype.

"The CFO has been a vacant position in the company for quite some time and its good to see a CFO hired with good solid industry experience," ISI Group analyst Brian Marshall said.

VMware, a publicly traded division of storage giant EMC Corp <EMC.N>, forecast fourth quarter revenue of $1.26 billion to $1.29 billion, compared with analysts' expectations of $1.28 billion, according to Thomson Reuters I/B/E/S.

Net profit fell to $157 million, or 36 cents per share, from $178 million, or 41 cents per share, a year earlier. Revenue rose 20 percent to $1.13 billion from $942 million.

Excluding items, the company earned 70 cents per share.

Analysts, on average, had forecast $1.13 billion in revenue and earnings of 63 cents per share.

U.S. revenues grew 25 percent to $554 million from the year-ago quarter, the company said.

"We had a solid third quarter with a slightly better than anticipated business with the U.S. federal government," Chief Operating Officer Carl Eschenbach said on a conference call with analysts. "U.S. federal government bookings grew slightly year-over-year and finished higher than expected."

"Offset by challenges in some countries, particularly within the EMEA (Europe, Middle East & Africa) region and Australia, we remain cautious about the potential for slower IT spending as we exit 2012 and enter 2013," he added.

VMware is the biggest maker of the so-called virtualization software that reduces the number of servers companies need. It competes with Oracle Corp <ORCL.O> in that market and with Salesforce.com Inc <CRM.N> in offering "cloud" computing services.

Shares of the Palo Alto, California-based company were up 2 percent at $85.41 in extended trade. It closed at $83.72 on Tuesday on the New York Stock Exchange.

(Reporting by Aurindom Mukherjee in Bangalore; Editing by Richard Chang)