The press release: finance.yahoo.com
VMware Raises Full-Year Forecast as Licensing Revenue Increases
by Danielle Muoio Dina Bass
BloombergBusiness
July 21, 2015 — 6:20 PM CDT
VMware Inc., the biggest maker of virtualization software, raised its full-year forecast as licensing revenue increased.
Full-year profit will be $3.97 to $4.03 a share, executives said on conference call Tuesday. The Palo Alto, California-based company previously had forecast $3.94 to $4.02.
VMware shares rose as much as 2.3 percent in extended trading. The stock fell 1 percent to $83.19 at the close in New York, leaving it up less than 1 percent this year.
Clients use VMware’s virtualization software to save money by consolidating applications. Customers have been renewing contracts for the software and adding management tools, said Abhey Lamba, an analyst at Mizuho Securities USA Inc.
Sales have been strong for items that VMware has rolled out over the last two years, such as cloud offerings and the AirWatch platform for business mobility management, said Michael Thacker, a company spokesman.
“There’s significant growth of bookings beyond stand-alone vSphere, our core product the company was founded on,” he said in an interview.
Second-quarter profit was 93 cents a share, excluding costs such as a $75.5 million overbilling settlement with the U.S. government, the company said in a statement. Analysts on average had projected profit of 91 cents a share, according to data compiled by Bloomberg.
Total revenue rose 4 percent from a year earlier to $1.52 billion, falling short of the $1.59 billion predicted by analysts. The company reported non-GAAP sales of $1.6 billion.
VMware forecast third-quarter profit, excluding some items, of 98 cents to $1 a share and sales of $1.65 billion to $1.67 billion. Analysts surveyed by Bloomberg had projected profit of $1 a share on sales of $1.66 billion.
Elliott Management Corp. is pressing VMware majority owner EMC Corp. to spin off the faster-growing unit, saying the parent is undervalued and that there’s too much overlap between the companies.
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