VMWare Rises After-Hours on Blowout Revenue Forecast

VMWare (VMW) is soaring after-hours on a strong earnings report. As I wrote earlier, analysts expected it to earn 26 cents a share excluding stock-based compensation and other items, but it exceeded those expectations by 19% -- earning 31 cents a share. But what seems to be boosting market enthusiasm is a very bullish revenue forecast.WMWare had experienced tepid 3.7% revenue growth in the third quarter of 2009 but it is now forecasting a booming year ahead. According to VMWare, it expects "first quarter revenues to be in the range of $580 and $600 million, an increase of 23% to 28% from the first quarter 2009. [VMWare] expects annual 2010 revenue to be in the range of $2.45 billion and $2.55 billion, an increase of 21% to 26% from 2009."

If there was any bad news, it was that VMware profit dropped 49% on higher research and development costs, which lowered operating margins. But investors seem very enthusiastic about the faster growth expectations and the stock is up over 18%.

Peter Cohan has no financial interest in VMWare securities.
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