VMware has reported a slight drop in third fiscal quarter 2012 income despite enjoying record revenue for the quarter.
At the same time, the cloud and virtualisation technology leader expects continued growth to come thanks to a couple of key acquisitions that it expects to help it be a leader in the development of software-defined data centers going forward.
VMware reported revenue for the third quarter of $US1.13 billion, up 20 percent from the $US942 million it reported for its third fiscal 2011 quarter.
Net income for the third quarter was $US157 million, compared to $US178 million for the third quarter of 2011
Revenue from license sales hit $US491 million for the quarter, up about 11 percent over last year, while services revenue rose about 29 percent during the same period to $US643 million.
Carl Eschenbach, chief operating officer and co-president of VMware, said a big feature of the third quarter was the $US1.2 billion VMware invested in acquiring software-defined networking (SDN) startup Nicira and its acquisition of DynamicOps, a developer of management software for provisioning apps and services across heterogeneous cloud infrastructures.
The idea of the software-defined data centre has emerged as the clear winner in terms of data center development going forward, Eschenbach said.
"The excitement around Nicira validates our approach to the software-defined data centre," he said.
For VMware, that spells growing strength for its vCloud Suite of software for building and managing a complete cloud infrastructure, as well as its Cloud Operations Services for helping customers transform their IT infrastructures into cloud infrastructures, Eschenbach said.
"The response to vCloud Suite and Cloud Ops from both partners and customers has been encouraging," he said.
VMware CEO Pat Gelsinger said vCloud Suite is VMware's first implementation of the Nicira SDN technology, giving his company a big opportunity to expand its reach into customers' public, private and hybrid clouds.
"We are the company customers increasingly turn to for help for transforming their IT to the cloud," Gelsinger said.
New CFO, nicked from Microsoft
VMware also used the release of its third quarter 2012 financial results to unveil the hiring of Jonathan Chadwick as its new CFO. Chadwick, who will officially take the CFO spot on November 5, most recently served as corporate vice president of arch-rival Microsoft and CFO of Skype, which Microsoft acquired.
Chadwick will replace Mark Peek, VMware's former CFO, who left the company in June.
Chadwick brings a wealth of financial experience to virtualisation and cloud software developer VMware, including a stint at arch-rival Microsoft, where he most recently served as corporate vice president of Microsoft and CFO of Skype.
Prior to Microsoft, Chadwick was executive vice president and CFO at McAfee, and served a few different financial roles at Cisco Systems.
At VMware, Chadwick will report directly to CEO Pat Gelsinger, who in July took over that role from former CEO Paul Maritz.
Looking behind to vRAM, ahead to 2013
VMware's Eschenbach said VMware's ending of its short-lived vRAM licensing scheme and returning to its previous CPU-based licensing model was welcomed by both channel partners and customers.
Channel partners said the reinstatement of the CPU-based licensing model removed a big sales barrier in the third and fourth quarters of 2012, while customers prefer the CPU-based model because of the simplification versus the vRAM model, he said.
When asked about the potential threat to VMware by the expected release of System Centre 2012 by rival Microsoft, Eschenbach dismissed any concerns by saying that it has yet to reach the market and that the global economic environment is the main factor going forward.
"While Microsoft is coming to market with a new platform, it should be called out that this is the third time in seven years that Microsoft has come to market with a 'good enough' product," he said.
Looking forward, Eschenbach expects VMware's fourth quarter 2012 revenue of between $US1.26 billion and $US1.29 billion, or up between 19 percent and 22 percent over the fourth quarter of 2011. That includes a 14 percent to 18 percent rise in license revenue to between $US587 million and $US605 million.
For all of 2012, VMware is maintaining the midpoint of its previous guidance by calling for total revenue of $US4.57 billion to $4.6 billion, or up between 21.4 percent and 22.2 percent over 2011, Eschenbach said. Licensing revenue for 2012 is expected to be up from 12.8 percent to 13.8 percent over 2011 because of a seasonably strong fourth quarter, he said.
This article originally appeared at crn.com
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