VMware cautious about economic recovery despite profits plummeting


VMware cautious about economic recovery despite profits plummeting

Paul Kunert

Virtualisation supplier VMware has become the latest IT vendor to voice cautious optimism about the economic recovery as more small scale projects get clearance.


Despite the comparatively upbeat nature of VMware’s third quarter teleconference with analysts last night, there was no masking the impact the recession has had on its bottom line with profits falling 54% year-on-year to $38m.


Sales for the period grew 4% to $490m including $240m from license revenues, down 15% on a year ago and $249m from professional services, up 33%. The software maintenance portion of services revenues was $213m, up 44%.


“The economic climate has improved and there are definitely swallows in the sky but we should remain cautious, it’s too early to declare that summer has returned in full,” said VMware chief executive Paul Maritz.


Enterprise License Agreements were approximately 15% of total Q3 bookings, similar to last year as large scale projects struggled to get sign off.


On a geographic basis, the US Federal market and Asia Pacific were strong but EMEA was seasonally weak.


VMware expects revenues of $540m to $560m in Q4 and would not provide more guidance beyond Q1 next year save to say it expects turnover to fall around 5% sequentially.


This article first appeared on Microscope

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