VMware -3.9% AH on soft license, margin guidance; EMC -1.5%

VMware (VMW) guides in its Q4 earnings slides for Q1 revenue of $1.33B-$1.37B and 2014 revenue of $5.94B-$6.1B (+14%-17% Y/Y), in-line with consensus estimates of $1.35B and $5.99B.

However, license revenue (drives future service revenue) is only expected to grow 12%-14% Y/Y in Q1 (down from a Q4 rate of 15%), and 12%-16% for the whole of 2014. In addition, VMware is guiding for a 2014 op. margin ~31%, down from a 2013 level of 34%. Investments in newly-acquired AirWatch (not expected to be accretive until late 2015) are a likely factor.

Q4's top-line figures (both for total and license revenue) matched those provided last week at the time of the AirWatch announcement.

VMware notes end-user computing (PC virtualization/mobile software) was an area of strength in Q4, with license bookings rising nearly 30%. That could be a positive for rival Citrix (CTXS), which reports tomorrow. Management/automation licenses (tied to VMware's vCloud suite) rose over 40%.

The flip side of these numbers: VMware's server virtualization license bookings growth may have been below 10%. Microsoft's Hyper-V (bundled with Windows Server) has been taking virtualization share.

VMware's unearned revenue balance rose 18% in 2013 to $4.1B. Full-year free cash flow was $2.19B, well above net income of $1.46B. $116M was spent on buybacks in Q4.

Parent EMC, which reports tomorrow morning, is off in sympathy.

Q4 results, PR

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