VMware a yawner now?
By Tarry Singh at 25 October, 2009, 11:07 am
Only after two spectacular years Motley Fool says that VMware is beginning to get boring. To whom: Investors? Firms are still buying VMware and sure enough VMware has competition but we’re still buying into VMware, no?
But for VMware, it’s no more than you’d expect. The annual VMworld conference came and went without any earth-shaking announcements, despite a slate of top-notch partners like Cisco Systems (Nasdaq: CSCO), Intel (Nasdaq: INTC), and IBM (NYSE: IBM).
New products are often a cause for celebration or calamity, but CEO Paul Maritz is feeling mellow about the recently released vSphere product suite: “I think we’ve been at pains to point out that vSphere is not going to be a big bang,” he told analysts in the earnings call. “This has to go through the stages of adoption. The effect will be felt over several quarters.” And CFO Mark Peek expects his business to return to seasonal patterns, including a slight sales drop between the fourth and first quarters. Yawn, again.
Perhaps the most exciting news in this release was that service revenue outgrew the rest of the business with a 33% annual uptick to $250 million. It’s a good sign of underlying strength in VMware’s business model as customers lock in to long-term service contracts even if they don’t buy a whole lot of new software licenses.
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