VMware says revenue may decline for the first time

23.04.2009
VMware reported a first-quarter profit on Wednesday but said that sales are being hit by the recession and it might report its first-ever drop in revenue next quarter.

Revenue for the period to March 31 was US$470 million, up 7 percent from the same quarter last year but a fraction below what analysts had predicted, according to Thomson Reuters.

License revenue declined 13 percent from a year ago, to $257 million, , VMware said. The drop was offset by a 48 percent jump in service revenue, which is becoming a larger part of VMware's business.

Net income for the quarter was $69.9 million, or $0.18 per share, up from $43.1 million, or $0.11 per share, in the first quarter of 2008. Excluding one-time charges, the earnings were $0.25 per share, up from $0.22 a year earlier. That beat the estimates of financial analysts, who had forecast a 10 percent drop in earnings, to $0.20 per share.

The tough economic climate, combined with the transition to a new version of VMware's core software that was announced Tuesday, will depress VMware's sales in the current quarter, CFO Mark Peek said in a .

"As a result, we expect our second-quarter revenues will be flat, or even down, compared to the second quarter of 2008,” he said.