VMware goes deep down as Q2 2008 earnings are announced
VMware finally released the much feared Q2 2008 earnings report:
- Revenues for the second quarter were $456 million, an increase of 54% from the second quarter of 2007
- GAAP operating income for the second quarter was $61 million, compared to $47 million for the same period last year
- Non-GAAP operating income was $112 million, an increase of 52% from the second quarter of 2007
- GAAP net income for the quarter was $52 million, or $0.13 per diluted share, compared to $34 million, or $0.10 per diluted share, for the second quarter of 2007
- Non-GAAP net income for the quarter was $92 million, or $0.23 per diluted share, compared to $52 million, or $0.16 per diluted share, for the second quarter of 2007
- Cash exceeded $1.5 billion and deferred revenue was $721 million as of June 30, 2008
The company adjusted its 2008 outlook accordingly:
- 2008 revenues are targeted to grow approximately 42% to 45% compared to 2007.
- Third quarter 2008 revenues are targeted to be within a range of approximately $462 to $468 million.
- Third quarter GAAP operating margin is targeted to be between 11% and 13%. This guidance includes stock-based compensation, employer payroll tax on employee stock transactions, amortization of intangible assets and capitalized software development costs which are targeted at 9% of projected revenue.
As this wasn’t enough, the company said that, because of the weak economy, it expects a further slowdown in closing the enterprise agreements.
The numbers, already expected below the forecast, had a seriously negative impact on the shares value.
The fact that VMware is going to release its hypervisor for free (a news that the audience probably didn’t clearly received) couldn’t help recovering the investors’ trust.
At the end of the day VMW lost 13% during after-hour trading:
Just two weeks ago the shares already lost 24% of the value because its co-founder and CEO Diane Greene was suddenly removed without further explanations.
The situation is so negative that VMware had to launch a stock options replacement program to compensate the loss that its newest employees suffered so far.
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