Shares of VMware Inc. (VMW: Quote) plunged 12 percent in extended trade on Monday, after the software maker detailed a weak revenue outlook for the first quarter, which is indicated to miss current market expectations, amid some tough economic environment.
Nevertheless, the virtualization software maker reported an increase in profit for the fourth quarter, driven mainly by higher service and license revenues. Both earnings and revenues for the quarter trumped analysts’ estimates.
Looking forward to the first quarter, VMware expect revenues of $1.17 billion to $1.19 billion. However, analysts currently expect the company to report revenue of $1.25 billion for the quarter.
Palo Alto, California-based VMware’s fourth-quarter profit improved to $205.8 million or $0.47 per share from $200.4 million or $0.46 per share last year.
Excluding special items, earnings for the quarter rose to $349.3 million or $0.81 per share from $266.3 million or $0.62 per share last year. On average, 40 analysts polled by Thomson Reuters expected earnings of $0.78 per share for the quarter. Analysts’ estimates typically exclude special items.
Revenues for the fourth quarter grew 22 percent to $1.29 billion from $1.06 billion last year. Analysts estimated revenues of $1.28 billion for the quarter.
License revenues grew to $596.7 million from $513.8 million last year, while services revenues rose to $696.4 million from $546.5 million last year.
Commenting on the results, Chief Executive Pat Gelsinger said, “2012 was a strong year for VMware, with solid Q4 results despite a tough economic environment. We see a tremendous market opportunity in 2013 and beyond…”
In a SEC filing, the company said it will eliminate 900 jobs, exit certain business lines and consolidate facilities. The company plans to streamline its operations thus to focus more on its strategic business. VMware expects total charge from this plan to be between $90 million and $110 million.
VMW closed Monday’s trading at $98.32, down 0.69%, on the NYSE. In after hours, the stock dropped $12.82 or 13.04%.
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by RTT Staff Writer
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