VMWare, Inc. (VMW) Q3 Tops EPS, But Misses Revenue

VMware logo

VMware, Inc. (NYSE:VMW) released its earnings report for the three months ending September 30 this afternoon after the market closed on Wall Street. The firm showed earnings of $0.84 per share for the three month period. Revenue for the quarter came in at $1.29 billion. On today’s market, stock in VMware, Inc. (NYSE:VMW) trended up a fraction to finish the day’s trading at $82.71 per share.

VMware logo

In anticipation of the release of this report, analysts studying VMware, Inc. (NYSE:VMW) were looking for earnings of 82 cents per share from the company on revenue totaling $1.3 billion. The same three months of 2012 saw the firm earn 70 cents per share on revenue of $11 billion. Stock in the company has been volatile through 2013, so traders are unsure about the firm’s prospects, probably avoiding holding stock into earnings.

VMWare earnings

VMware, Inc. (NYSE:VMW)’s main business, vSphere, has gotten weaker in recent years as enterprise spending on information technology has dried up. Desktop virtualization products, like vSphere, have become a central part of enterprise computer operations. That means that although fees from licensing are high, the company’s growth prospects in the market aren’t good.

That has left VMware, Inc. (NYSE:VMW) looking elsewhere for growth. The company’s service revenues have been growing strongly, and it has invested in new technologies that move past virtualization and totally into the cloud. The company’s cloud infrastructure is seen as a real driver of growth in the future.

VMWare performance

Earnings reports tend to produce a lot of volatility in VMware, Inc. (NYSE:VMW) stock. Back in January, when the firm delivered its fourth quarter 2012 earnings report, the value of the stock fell by 22 percent in a single day. In July, the company’s stock jumped by close to 20 percent in a single day’s trading. VMWare ownership is not for the faint of heart.

For the full year of 2013, neglecting the hills and the valleys, shares in VMware, Inc. (NYSE:VMW) have actually lost more than 13 percent of their value. The company’s stock trades at more than 45 times its 2012 earnings. That means there’s a great deal of growth priced into the firm right now.

VMware, Inc. (NYSE:VMW) executives will host a conference call to discuss this earnings report at 5 PM EST. The company’s executives and the analysts following it will be wondering about the company’s new products, and its plans for new releases in the year ahead.

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Paul Shea
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