What happened

Shares of virtual computing veteran VMware (NYSE:VMW) crashed on Friday, following the release of mixed fourth-quarter 2020 results. By 3 p.m. EST, the stock was down 9.5%.

So what

VMware's fourth-quarter sales rose 11% to $3.07 billion, just ahead of Wall Street's consensus estimate of $2.95 billion. Adjusted earnings increased by 9% to $2.05 per diluted share. Here, your average analyst had been expecting earnings near $2.17 per share.

A red charting arrow headed downwards against a plain white backdrop.

Image source: Getty Images.

Now what

Looking ahead to fiscal 2021, VMware guided full-year revenue to approximately $12.1 billion, a 12% year-over-year growth rate. Earnings for this period should land near $6.55 per share, a 5% increase from fiscal 2020. Analysts had been expecting earnings closer to $7.03 per share on sales in the vicinity of $11.4 billion, making for another mixed bag. VMware's guidance includes a modest impact on the company's Asian business prospects due to the coronavirus threat but did not bake virus-related slowdowns into any other targets.

"Too early to tell its ultimate impact and probably have some effect of moderation overall for the year, but that's against a robust view of IT and tech spend as a core digital transformation agenda for years into the future," said CEO Pat Gelsinger in the fourth-quarter earnings call.

"We're monitoring closely, and it's early in our quarter and then potentially early days for the virus as well," CFO Zane Rowe explained.

Today's sharp adjustment shows that investors are expecting these full-year guidance goals to be trimmed as the coronavirus situation unfolds. The tech sector is sure to experience virus-based slowdowns far outside the Asia-Pacific region, after all.

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