VMware Profit, Sales Top Analyst Estimates on New Products

  • Company looking to new products as virtualization growth slows
  • Parent company EMC has shareholder vote on Dell deal Tuesday

VMware Inc. reported profit and sales that exceeded analysts’ estimates and raised forecasts as the company persuaded customers to buy newer products like networking software.

Key Points

  • Second quarter revenue was $1.69 billion, compared with analyst estimates of $1.68 billion. Sales rose 11 percent from a year ago.
  • Profit, excluding certain items, was 97 cents a share in the period. Analysts on average had forecast 95 cents.
  • Shares rose as much as 12 percent in extended trading after closing at $62.57 in New York.
  • The company raised its forecasts for the current quarter and the rest of the year. For the third quarter, VMware projects profit of about $1.10 a share and sales of about $1.76 billion. Full-year sales will be about $7 billion and profit, excluding some items, will be about $4.30 a share, the company said. Previously, VMware forecast 2016 profit of $4.09 to $4.18 a share.

The Big Picture

VMware, the leader in virtualization software that lets companies cram more workloads onto servers, is facing slowing growth for that product because many customers already have ample copies of it. The company has been turning to newer products like software that replaces some of the tasks of networking hardware as well as programs that help companies manage mobile devices.

The company is trying to grow against a backdrop of continued change from executive departures and the pending acquisition of its parent company EMC Corp. by Dell Inc. EMC shareholders will vote on the deal Tuesday.

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