VMware - Strong Earnings

VMware shares climb sharply on strong earnings, outlook
By Associated Press April 23, 2008 Comments (0)
1 Recommendation
Shares of VMware Inc. climbed Wednesday, a day after the virtualization software company posted robust first-quarter profits and said it expects revenue to grow 55 percent in the second quarter.
The stock rose $2.82, or 4.9 percent, to close at $60.84.
BMO Capital Markets analyst Keith Bachman said in a note to investors that VMware's results remove "a wall of worry," given investors' anxiety ahead of the results. Bachman noted that the company's $438 million in revenue beat his estimates of $425 million, and said he expected continued results from the company's service segment.
Bachman maintained his 2008 outlook, but raised his 2009 profit forecast to $1.56 per share from $1.52. On average, analysts polled by Thomson Financial expect a 2009 profit of $1.52 per share.
Separately, Pacific Growth Equities analyst Kaushik Roy was similarly impressed by the company's quarterly results, but said Wall Street's full-year outlook on the Palo Alto, Calif.-based company may be too optimistic following management's second-quarter revenue outlook of $460 million.
Still, the analyst said the company was "off to a very good start" for the next quarter, and was taking positive steps in updating its product lines, especially in its desktop virtualization products.
"We suggest investors remain buyers of (VMware) stock at these levels," he said.
Virtualization software allows a single computer to operate like multiple machines, allowing companies to spend less on equipment and energy in their data centers.
The company had a blockbuster intial public offering in August in which its $29 opening price tripled in one month. It was the biggest technology IPO since Google went public in 2004.