VMware profit plummets

By Kevin McLaughlin on Jul 25, 2012 8:08 AM
Filed under Cloud

Execs hail Nicira deal.

VMware has reported fiscal second quarter results mostly in line with Wall Street's expectations, but ended up being overshadowed by the vendor's $US1.2 billion acquisition of network virtualisation startup Nicira.

VMware's second-quarter net income was $US192 million, or 44 cents a share, down nearly 13 percent from the $US220 million and 51 cents a share it turned in during last year's second quarter.

Excluding items, VMware earned 68 cents per share, while Wall Street analysts polled by Thomson Reuters were expecting 66 cents per share.

Nicira is VMware's most expensive acquisition to date, said CEO Paul Maritz, who is moving over to EMC on Sept. 1 to take the newly created role of chief strategist.

However, Nicira is poised to transform networking in much the same way as VMware has transformed the data center with server virtualisation, Maritz said.

"Our strategy is to be a leader in providing the software ingredient of the software defined data centre," Maritz said. "With Nicira, VMware is well positioned to provide the networking function for other, non-vSphere based pools of infrastructure. This is a deepening and a broadening of our strategy."

VMware will pay $US1 billion in cash and $US210 million of assumed unvested equity awards for Nicira, a startup founded by Stanford University researchers Martin Casado and Nick MeKeown and University of California at Berkeley researcher Scott Shenker.

For its third quarter, VMware is expecting revenue around $US1.1 billion. For fiscal 2012, VMware is expecting revenue of between $US4.5 billion and $US4.6 billion.

This article originally appeared at crn.com

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VMware profit plummets
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