Menu
VMware license revenue slips 20 percent

VMware license revenue slips 20 percent

Overall revenue was flat, the first time sales haven't increased at VMware since it became a public company two years ago

VMware reported a drop in profit for the second quarter as businesses cut spending on new software amid the tough economy.

Revenue was flat from the year before, at $US456 million, while net profit declined to $US33 million, from $US52 million in the second quarter last year, the company said Wednesday.

New license revenue, which is seen as an indicator of future growth, declined 20 percent from a year ago to $US228 million, VMware said. It blamed "the challenging macroeconomic environment."

The results beat the expectations of financial analysts, however. VMware had warned in April that revenue might decline for the quarter, and analysts had been forecasting a 1 percent drop in sales, to $US452 million.

Excluding one-time charges, VMware's profit for the quarter was $US80 million, or $US0.20 per share, better than the analyst forecast of $US0.19 per share, Thomson Reuters said.

VMware warned when it reported its first-quarter results that revenue might be flat or slightly down this quarter. It cited the recession and the introduction of a new product, vSphere, in May, which it said would be a distraction for channel partners while they get trained on the new product.

It marks the first time that VMware's revenue hasn't grown since the company went public in 2007. The growth rate had been slowing, however, as VMware became larger and the initial wave of adoption for server virtualization started to slow.

Separately on Wednesday, VMware rival Citrix Systems reported second-quarter revenue of $US393 million, up a fraction from last year, and a profit of $US43 million, up from $US35 million. Product license revenue declined 15 percent, however, the company said.

VSphere is an update to VMware's core virtualization software. The company bills it as a "cloud operating system" that will allow customers to manage and provision server, storage and network resources as if they were a single large computer.

The software includes fault tolerance capabilities and a more scalable hypervisor that should allow customers to run large databases and other enterprise applications on virtualized servers, according to VMware.

With the basic tools for virtualization now a commodity, analysts say vSphere is important for VMware to help it retain a technology lead over rivals Microsoft and Citrix.

VMware plans a further upgrade that will allow companies to transfer virtual workloads between their own data centers and those of cloud service providers such as Terremark and Savvis. Analysts will be listening for news in Wednesday's conference call of when that product will ship.

Also during the quarter, VMware paid $US20 million to buy a 5 percent stake in Terremark, a close partner that uses VMware's software for its managed hosting services.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags VMware

Events

Featured

Slideshows

Meet the Reseller News 30 Under 30 Tech Awards 2020 winners

Meet the Reseller News 30 Under 30 Tech Awards 2020 winners

This year’s Reseller News 30 Under 30 Tech Awards were held as an integral part of the first entirely virtual Emerging Leaders​ forum, an annual event dedicated to identifying, educating and showcasing the New Zealand technology market’s rising stars. The 30 Under 30 Tech Awards 2020 recognised the outstanding achievements and business excellence of 30 talented individuals​, across both young leaders and those just starting out. In this slideshow, Reseller News honours this year's winners and captures their thoughts about how their ideas of leadership have changed over time.​

Meet the Reseller News 30 Under 30 Tech Awards 2020 winners
Reseller News Exchange Auckland: Beyond the myths — how partners can master cloud security

Reseller News Exchange Auckland: Beyond the myths — how partners can master cloud security

This exclusive Reseller News Exchange event in Auckland explored the challenges facing the partner community on the cloud security frontier, as well as market trends, customer priorities and how the channel can capitalise on the opportunities available. In association with Arrow, Bitdefender, Exclusive Networks, Fortinet and Palo Alto Networks. Photos by Gino Demeer.

Reseller News Exchange Auckland: Beyond the myths — how partners can master cloud security
Reseller News welcomes industry figures at 2020 Hall of Fame lunch

Reseller News welcomes industry figures at 2020 Hall of Fame lunch

Reseller News welcomed 2019 inductees - Leanne Buer, Ross Jenkins and Terry Dunn - to the fourth running of the Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed the changing face of the IT channel ecosystem in New Zealand and what it means to be a Reseller News Hall of Fame inductee. Photos by Gino Demeer.

Reseller News welcomes industry figures at 2020 Hall of Fame lunch
Show Comments