Jul. 22, 2014, 10:47 PM
- VMware (NYSE:VMW) guided on its Q2 CC for its Q3 revenue of $1.48B-$1.52B, in-line with a $1.5B consensus. Full-year revenue guidance has been narrowed to $5.96B-$6.08B from a prior $5.94B-$6.1B; consensus is at $6.02B.
- License revenue rose 16% Y/Y in Q2, up from Q1's 15% and near the high end of guidance of $605M-$615M. VMware expects Q3 license revenue of $630M-$645M (+12%-14%), and full-year license revenue of $2.56B-$2.62B (+13%-15%).
- Services revenue (driven by past deals) rose 18% in Q2 to $843M. Op. margin fell to 29.4% from 33.5% a year ago.
- VMware's costly enterprise license agreements (ELAs) rose to 37% of bookings from 25% in Q1; eight $10M+ ELA deals were inked in Q2 vs. two in Q1.
- Cloud management license bookings grew over 30% Y/Y for another quarter, and end-user computing (PC virtualization/AirWatch) rose over 50%. ~50% of ELAs once more included the entire vCloud Suite.
- The company also says its much-hyped NSX networking virtualization/SDN platform is now on a $100M+/year run rate, and that its VSAN storage virtualization platform beat internal targets. Judging by total license growth rates, standalone server virtualization revenue is growing relatively slowly.
- Unearned (deferred) revenue +22% Y/Y to $4.39B. Long-term unearned revenue +23% to $1.68B.
- VMW +0.5% AH, as the guidance and a Q2 beat are taken in stride. Parent EMC, just challenged by Elliott Management to unload VMware, reports Wednesday morning.
- Q2 results, PR, earnings slides (.pdf)
Jul. 22, 2014, 4:03 PM
- VMware (NYSE:VMW): Q2 EPS of $0.81 beats by $0.02.
- Revenue of $1.46B (+17.7% Y/Y) beats by $20M.
Jul. 21, 2014, 6:39 PM
- Though Elliott Management is pushing EMC (EMC +5%) to fully spin off VMware (VMW -2.5%), "management has made it clear its not in the best interest of EMC to do so" as recently as May, notes RBC. The firm considers it more likely EMC will buy out VMware's minority holders.
- Nonetheless, RBC thinks Elliott's efforts could propel EMC's shares higher, given the low valuation assigned to EMC ($58B market cap) excluding its VMware stake (market value of $32B). Oppenheimer, for its part, is hoping Elliott will get EMC to return more cash or cut costs.
- EMC has long argued holding onto VMware yields product synergies between VMware's server virtualization and data center/cloud management software, and EMC's storage hardware and management software.
- Among other things, the companies are currently working on Project Mystic, an integrated server/storage appliance that includes VMware's server (vSphere), storage (VSAN), and networking (NSX) virtualization offerings.
- Aside from product synergies, there's the fact VMware (expected to post 15%+ sales growth in both 2014 and 2015) continues to grow much faster than EMC's storage ops, which have been pressured by soft high-end demand and the adoption of cloud storage services running on white-label hardware.
Jul. 21, 2014, 5:35 PM
Jul. 21, 2014, 7:39 AM
- EMC +4.9% premarket following a WSJ report that activist investor Elliott Management has taken a $1B-plus stake in the company and plans to push for a spinoff its VMware (NYSE:VMW) unit.
- Elliott's investment would amount to ~2% of EMC’s $55B equity value, and would make the hedge fund its fifth-largest shareholder and would be one of the largest positions Elliott has ever taken.
- Elliott will seek to convince EMC that the company’s lagging stock would receive a substantial boost if it were to spin off VMware, the report says.
Jul. 16, 2014, 12:35 AM
- VMware (NYSE:VMW) is forming a JV with SoftBank (OTCMKTS:SFTBF) to offer its vCloud Hybrid cloud infrastructure (IaaS) service in Japan. VMware will build and run the service, and SoftBank will provide the data centers and network it runs on. Both companies will offer the service through their sales channels.
- Over in China, VMware is partnering with China Telecom (NYSE:CHA) to offer vCloud Hybrid. In this case, China Telecom will operate the service, and VMware will simply provide the underlying software. The arrangement could appeal to Chinese firms hesitant to use a public cloud run by a U.S. company (say, Amazon) following the NSA uproar.
- Until now, vCloud Hybrid (launched in 2013) was only available at U.S. and U.K. sites. The service has won praise for the way it lets users jointly manage and quickly migrate public and private cloud workloads, but it continues facing tough competition from Amazon, Microsoft (the hybrid cloud leader), Google, IBM, and Rackspace, among others.
- Separately, parent EMC's RSA unit has bought technology assets from Symplified, a provider of cloud identity management services that enable single sign-on and automatic user provisioning for a variety of cloud apps/services. Symplified is shutting down its operations.
- EMC/RSA says it will add Symplified's IP to its Identity solutions portfolio. The purchase follows RSA's 2013 acquisition of Aveksa, a provider of tools for managing access to corporate apps and data.
- VMware reports on July 22, and EMC the following morning.
Jul. 14, 2014, 2:30 PM
- H-P (HPQ +0.6%) will offer a quality $199 Windows laptop for the holidays, Microsoft (MSFT +0.3%) COO Kevin Turner promises at his company's partner conference. Turner also says H-P will sell 7" and 8" Windows tablets for $99, and that Toshiba will sell a $249 notebook with an 11.6" screen and 32GB SSD.
- "We’ve got a great value proposition against Chromebooks," claims Turner, driving home whom he considers competition. IDC noted last week Chromebooks, which added offline app support last year, contributed to a Q2 rebound in low-end notebook sales.
- Turner's remarks come as Digitimes reports Microsoft is planning to end Windows license fees for all sub-$250 tablets. The company has already eliminated fees for all sub-9" mobile devices.
- Turner also declares SharePoint to be a $2B/year business, says Office has "rescued" 785 Google Apps customers in the last 18 months, and reports Azure added 42K+ customers in FY14 (ended in June). (live blog)
- He claims (citing market share data) Microsoft's Hyper-v is "eating VMware's (VMW +1.8%) lunch" in the server virtualization market. Wells Fargo cited slowing server virtualization growth as a reason for downgrading VMware last week, while asserting "most industry analysts agree that Microsoft has essentially closed the functionality gap with [VMware's] vSphere."
- Microsoft and VMware both report on July 22.
Jun. 20, 2014, 1:27 PM
- Oracle missed FQ4 estimates thanks in part to weaker-than-expected license growth that has stoked fresh cloud competition fears. FQ1 guidance is in-line.
- Tibco, which has been dealing with competitive and execution issues for several quarters, posted FQ2 numbers that were slightly better than the outlook provided in a June 3 warning, but also issued weak FQ3 guidance.
- Many enterprise software names are trading lower, including several cloud software firms and a few companies viewed as big data/analytics plays: VMW -1.3%. SPLK -1.9%. DATA -2.3%. INFA -1.6%. MKTO -3.8%. JIVE -2.5%. CSLT -4.1%. BSFT -3.3%.
- Workday (WDAY -2.2%) is also among the decliners. Larry Ellison again went out of his way to take shots at the cloud HR leader during Oracle's earnings CC (transcript). "We already have a huge lead over Workday in cloud ERP ... In HCM, we are dominating Workday in Europe, and beating them in dozens of core HCM deals here in North America." Workday will probably beg to differ on the specifics.
Jun. 6, 2014, 7:12 PM
- Responding to comments from John Chambers and other Cisco (CSCO) execs suggesting VMware (VMW) has only a handful of paying clients for its NSX software-defined networking (SDN) platform, VMware CEO Pat Gelsinger recently declared NSX's client base has hit 100.
- Gelsinger: "Some [clients] are in prototypes, some are in full deployment, but they’re paying customers." He adds two older VMware SDN clients, Rackspace and eBay, are "at dramatic production scale," and that many customers use NSX to create a secure network within a network.
- Also: Gelsinger claims Cisco's shots at VMware are good PR. "Cisco declared us public enemy No. 1, so all of a sudden every customer, every purchasing agent, has to say, ‘What’s going on over there?’"
- NSX, backed by many Cisco rivals and enabled by VMware's 2012 acquisition of early SDN leader Nicira, can be used to enable networks running on commodity gear, rather than proprietary/high-margin hardware from Cisco and others.
- Cisco is countering with its Insieme/ACI platform, which it argues delivers (thanks to hardware/software integration) better network/app visibility and simpler management. VMware and other critics assert it's much costlier.
May 31, 2014, 2:37 PM
- Leading mobile device management (MDM) software firm MobileIron (MOBL) has set an $8-$10 IPO price range. At the midpoiint, the range spells a valuation of $672M, or 6.4x 2013 sales.
- MobileIron, which originally filed in April, is looking to raise $89M-$111M by selling 11.1M. shares. Though still growing at a healthy clip, the company's latest S-1 points to a growth slowdown: Billings rose 34% Y/Y in Q1 to $30.3M, notably slower than 2013's 48% clip. Revenue, pressured by a shift to subscription sales from perpetual licenses, only rose 9% to $28.2M.
- Good Technology, another high-profile MDM player, is also getting set to go public ... and its numbers are more worrying. Billings actually fell 2% Y/Y in Q1 to $47.4M, and 1% in 2013 to $194.3M. Revenue still rose 35% in Q1 to $46.6M. Good hasn't yet disclosed a symbol or offering terms. (S-1)
- Each company, along with its peers, faces two big challenges. One is that the MDM market has become intensely competitive, with SAP, IBM, BlackBerry, VMware, Citrix, and (most recently) Microsoft all looking for a piece of it.
- VMware (VMW) made a $1.54B bet on the space in January by acquiring MDM vendor AirWatch. BlackBerry (BBRY), which has added iOS/Android support to its offerings, has made MDM a key part of its enterprise-focused turnaround strategy.
- The other issue, which also affects larger firms, is that many MDM installations haven't gone as planned. GigaOm's talks with CIOs using a "well-known" offering found (among other things) MDM was often "limited to password enforcement and remote wipe," and that e-mail was "the only widely-supported secure app."
- The site adds that while "enterprises have spent millions" on mobile management solutions, most of the software "sits unused because making the pieces work together still proves difficult."
May 29, 2014, 10:35 AM
- "We see a solid set-up for a Q2 bookings rebound and more powerful multi-year product drivers than VMW has enjoyed in quite some time," writes Piper's Mark Murphy, upgrading VMware (VMW +2.7%) to Overweight.
- Murphy adds a reseller survey points to "adoption rates moving to their highest level ever," and declares VMware has a better chance than investors realize to "mow down" PC virtualization leader Citrix (CTXS +0.1%), given product parity and talent defections.
- VMware took fresh aim at Citrix last month by launching an integrated PC/app virtualization platform, and reported a 35% Y/Y Q1 increase in its end-user computing (inc. PC and mobile solutions) license bookings.
- At the same time, the company posted sub-10% total bookings growth, as its standalone vSphere server virtualization sales come under pressure from Microsoft's Hyper-V and open-source offerings (inc. Citrix-backed Xen). VMware is counting on higher sales of its vCloud Suite (combines vSphere with cloud/data center management products) to help buck the trend.
May 20, 2014, 2:44 PM
- Citing positive checks and "recent due diligence" regarding two privately-owned rivals, JMP has hiked its FQ1 Splunk (SPLK +0.4%) revenue forecast by $1M to $83M (above an $80.7M consensus), and is reiterating an Outperform ahead of the company's May 29 report. Shares are up slightly on a down day for equities.
- With shares now at $44, JMP has decided to slash its PT by $44 to $66. Its new target spells a valuation of 8.6x EV/2016E sales. "Our target multiple decreases as multiples of other stocks in Splunk's high-growth peer group have declined significantly.”
- Morgan Stanley (Equal-Weight) is a little more cautious: Though upbeat about Splunk's long-term opportunity, the firm thinks "a slowdown in productive sales capacity growth, price cuts and increasing competition represent [near-term] tactical headwinds."
- The notes arrive as VMware (VMW -2.8%), hungry to grow its non-virtualization revenue base, takes aim at Splunk by launching the second-gen version of its vCenter Log Insight machine/log data analytics software (previous).
- VMware claims the product, aimed at Splunk's core IT operations market, delivers a 6x improvement in query performance, as well as new machine learning tech that "automatically groups related data."
- Previous: Analysts return from Splunk conference with high praise
Apr. 23, 2014, 3:58 PM
- Plenty of enterprise software names have underperformed on a down day for tech stocks after VMware (VMW -9.2%) provided soft bookings numbers (sub-10% Y/Y growth in the Americas, EMEA, and Asia-Pac), and blamed it on delays in signing major enterprise licensing deals (ELAs) as it talks with clients about more expansive agreements.
- VMware rivals Oracle (ORCL -1.6%), Citrix (CTXS -2.8%), and Red Hat (RHT -1.7%) are among the decliners. Others: CRM -2.5%. WDAY -5.6%. SPLK -6.3%. VEEV -4.3%. NOW -4.2%. TIBX -2.9%. INFA -2.2%. QLIK -3.2%.
- Nomura (Buy) observes that while VMware reported 18% Y/Y billings growth, underlying growth may have been in the single digits after accounting for the AirWatch deal and other adjustments. Nonetheless, it thinks ELA weakness might be a seasonal issue that will correct in Q2.
- Is competition taking a toll? In spite of the soft bookings figures, VMware managed to report strong licensing activity for products other than its core vSphere server virtualization platform, and noted on its CC (transcript) solutions other than standalone vSphere made up over 45% of license bookings (up from 30%+ a year ago).
- Microsoft's Hyper-V has been gradually eating into vSphere's market dominance. Other cheaper alternatives such as the open-source Xen (backed by Citrix) and KVM have also been gaining ground.
Apr. 23, 2014, 9:32 AM
- Following a Q1 revenue beat, EMC has slightly upped its full-year revenue guidance to $24.575B from a prior $24.5B. But EPS guidance has been lowered by $0.05 to $1.90. The consensus is at $24.51B and $1.94.
- After rising 11% Y/Y in Q4, product revenue fell 3% in Q1 to $3.01B. Services revenue (driven by product revenue) rose 9% to $2.47B, after growing 10% in Q4.
- EMC's core Information Storage ops (67% of revenue) saw sales fall 3% Y/Y (product sales -7%) after growing 10% in Q4, thanks largely to a 22% drop in high-end storage sales (a high-margin business) to $940M. Unified storage and backup/recovery sales +4% to $1.44B, other storage -12% to $830M.
- Emerging Storage (inc. Atmos, Isilon, and flash storage) remains a bright spot, with sales growing 81% to $81% to $470M. RSA Security +5% to $244M, Pivotal (still waiting for its IPO) +41% to $49M.
- North American sales were flat at $2.99B, and EMEA grew 8% to $1.59B. But Asia-Pac fell 2% to $720M, and Latin America 11% to $180M.
- Gross margin -30 bps Y/Y to 62.8%, higher SG&A spend contributed to a 270 bps drop in op. margin to 20.5%. $390M was spent on buybacks in Q1; EMC still expects to repurchase $2B worth of shares in 2014.
- EMC is off thanks to its EPS guidance cut and VMware's (VMW -6.8%) soft bookings. VMware blames delays in closing enterprise license agreements (ELAs) as it holds "deeper conversations" about expanded deals.
- Q1 results, PR, slides
Apr. 22, 2014, 6:15 PM
- Though VMware (VMW)'s license revenue rose 15% Y/Y in Q1 to $561M (beating guidance of $545M-$555M), the company disclosed on its CC license and total bookings growth was less than 10%, with sub-10% bookings growth in all three major geographies. Total bookings had risen at a mid-teens clip in Q4.
- Nonetheless, VMware is maintaining its prior forecasts for 2014 revenue of $5.94B-$6.1B (+14%-17%) and license revenue of $2.55B-$2.63B (+12%-16%). AirWatch is expected to contribute $100M.
- Q2 revenue, which assumes a $22M contribution from AirWatch, is expected to grow 15%-18% Y/Y to $1.425B-$1.465B (consensus is at $1.44B). License revenue is expected to grow 14%-16% to $605M-$615M.
- Some bright spots: End-user computing license bookings (PC virtualization, will include AirWatch going forward) rose 35%, and cloud management license bookings over 30%. Also, ~50% of VMware's costly enterprise license agreements (ELAs, 25% of bookings) included its far-reaching vCloud Suite.
- VMware's unearned revenue balance totaled $4.17B at the end of Q1, up 20% Y/Y. $169M was spent on buybacks.
- Parent EMC, which reports tomorrow morning, is following VMware lower.
- Q1 results, PR, CC slides
Apr. 22, 2014, 4:05 PM
- VMware (VMW): Q1 EPS of $0.80 beats by $0.01.
- Revenue of $1.36B (+14.3% Y/Y) beats by $10M.
VMware, Inc. provides virtualization infrastructure solutions utilized by organizations to help transform the way they build, deliver and consume information technology resources. Its virtualization infrastructure solutions, which include a suite of products designed to deliver a... More
Industry: Technical & System Software
Country: United States
Other News & PR