VMware Beats Revenue and Profit Estimates, Raises Outlook

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Software maker VMware Inc beat first-quarter revenue and earnings estimates, and slightly raised its full-year outlook, citing sustained demand for virtual servers and cloud computing technologies.

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VMware, a publicly traded division of storage giant EMC Corp , said that demand was strong in Japan and China, as well as Europe, particularly the UK, even in the face of the euro zone debt crisis.

Chief Financial Officer Mark Peek, who is leaving to work in the same position at enterprise software company Workday, said that VMware remained cautious about the macroeconomic environment and the federal spending outlook in the United States.

Nevertheless, Peek said, on the back of the first quarter and expectations for the second quarter, VMware increased its revenue outlook marginally.

"To keep growth rates at least at the top end at 16 percent seemed the prudent thing to do and then we brought the floor up from 11 percent to 12 percent," he said.

VMware, the biggest maker of so-called virtualization software, which reduces the number of computer servers companies need, r a ised its full-year revenue target slightly, to a range of $4.53 billion to $4.63 billion.

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Previously, VMware had forecast an increase in full-year revenue of between $4.48 billion and $4.6 billion.

Second-quarter revenue is expected to range from $1.10 billion to $1.12 billion, VMware said.

Chief Executive Paul Maritz said that the company was well aligned to respond to two major industry trends, the need for fundamental efficiencies and the need for services to enable those efficiencies.

"People are realizing that the competitive environments demand that they need to respond with new applications, new experiences for their customers," Maritz said, adding that prompted VMware to invest in programming frameworks and Cloud Foundry among other things.

"Those will take longer to show up in our bottom line results, but the good news is that we believe that is another fundamental trend that will stand us in good stead in the longer term," he said.

VMware reported first-quarter revenue of $1.06 billion a 25 percent increase from the year before, and profit, excluding items, of $287 million, or 66 cents per share.

Analysts on average had forecast $1.03 billion in revenue and earnings of 60 cents per share, according to Thomson Reuters I/B/E/S.

Asked about a successor to Peek, Maritz said that VMware, with three experienced CFOs on its board, had the luxury of taking its time in finding a replacement.

VMware shares gained about 2 percent in extended trading after closing up 0.7 percent at $111.29 on Wednesday.

VMware competes with Oracle in the virtualization software market and with Salesforce.com in offering "cloud" computing services (Reporting By Nicola Leske; Editing by Richard Chang and Steve Orlofsky)

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