VMware Beats on Both Top and Bottom Lines

VMware (NYSE: VMW  ) reported earnings on Jan. 28. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), VMware beat slightly on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share didn't change.

Gross margins grew, operating margins contracted, net margins dropped.

Revenue details
VMware tallied revenue of $1.29 billion. The 37 analysts polled by S&P Capital IQ predicted a top line of $1.28 billion on the same basis. GAAP reported sales were 22% higher than the prior-year quarter's $1.06 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.81. The 40 earnings estimates compiled by S&P Capital IQ anticipated $0.78 per share. GAAP EPS of $0.47 were the same as the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 85.2%, 90 basis points better than the prior-year quarter. Operating margin was 19.5%, 70 basis points worse than the prior-year quarter. Net margin was 15.9%, 300 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.25 billion. On the bottom line, the average EPS estimate is $0.74.

Next year's average estimate for revenue is $5.43 billion. The average EPS estimate is $3.24.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 2,133 members out of 2,313 rating the stock outperform, and 180 members rating it underperform. Among 535 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 499 give VMware a green thumbs-up, and 36 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on VMware is outperform, with an average price target of $107.39.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. 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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  • Report this Comment On January 29, 2013, at 10:06 AM, gloglu01 wrote:

    Sounds good, but the stock is tanking!

  • Report this Comment On January 30, 2013, at 3:36 AM, FlyboyAlaska wrote:

    This article and a second by Eric Volkman both were dated today, a day when the stock dumped nearly 20% of its price. What will the 2133 out of 2313 say tomorrow? I anxiously await analysis by these same two authors in tomorrow's in-basket.

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