Why VMware Shares Skyrocketed

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of virtualization specialist VMware have skyrocketed today by as much as 18% after the company reported earnings last night.

So what: Revenue in the second quarter totaled $1.24 billion, which translated into adjusted earnings per share of $0.79. Both figures topped the market's expectations of $1.23 billion in sales and $0.77 per share in adjusted profit. Investors were impressed with VMware's guidance.

Now what: Third-quarter sales are expected to be in the range of $1.27 billion to $1.3 billion, and license revenues should be $535 million to $555 million. Full-year revenue should be $5.12 billion to $5.26 billion. That outlook helped dispel fears that VMware's business was maturing and growth was slowing, as pessimism had been growing recently. Nomura Securities and Raymond James both upgraded VMware to "buy."

Interested in more info on VMware? Add it to your watchlist by clicking here.

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The article Why VMware Shares Skyrocketed originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool recommends VMware. The Motley Fool owns shares of VMware. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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