VMware, Inc. (VMW) Q1 Earnings Disappoint, Shares Drop 8%

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VMware, Inc. (NYSE:VMW) announced its earnings for the first quarter of 2013 today after the market closed. The company announced that it had earned $0.74 per share in the first three months of 2013, on revenue of $1.19 billion. On today’s market shares in VMware, Inc. (NYSE:VMW) trended up, finishing the day at $75.79.

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Analysts studying the company were looking for earnings of 70 cents per share form VMware, Inc. (NYSE:VMW) in this report, on revenue of $1.2 billion. In the same three months of 2012, the company earned 66 cents per share on revenue of $1.1 billion. Leading up to the announcement of the earnings report, whispered numbers suggested that the company would earn a cent above what analysts expected.

So far in 2013, VMware, Inc. (NYSE:VMW) has been among the poorer tech companies on the market. Since January 1, shares in the company have decreased by more than 19 percent. Most of that fall came after the company revealed a disappointing outlook for 2013 in its fourth quarter 2012 earnings report.

The fall in the price of VMware, Inc. (NYSE:VMW) shares has been substantial. Since highs hit before the January earnings report, investors have lost more than 23 percent of the value of shares held in the company. Those still holding the shares will be hoping for a turnaround in outlook for the rest of 2013.

If the lens is widened to cover the last twelve months, the problems at the company appear significantly worse. Since last April, VMware, Inc. (NYSE:VMW) shares have lost almost 30 percent of their value. The company is involved in an industry that is thought to be booming, making the firm’s disappointing performance all the more surprising.

VMware, Inc. (NYSE:VMW) manages storage and network solutions for enterprise end customers. The business is becoming more and more competitive, with companies like International Business Machines Corp. (NYSE:IBM) getting into the market, and it appears some analysts are jumping on the low price of the company’s shares as a reason to buy the stock.

At today’s close, VMware, Inc. (NYSE:VMW) was close to its 52 week low, but buying at a low doesn’t necessarily mean that shares are due for a bounce.

VMware, Inc. (NYSE:VMW) is in a growing market, but it isn’t managing to leverage that to return value to its shareholders. With this earnings report, the company is not in terrible shape, but it’s not reaching the potential investors bought into in the past.

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Paul Shea
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