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January 25, 2011, 4:38 PM EST
By Aaron Ricadela
(Updates with closing share price in sixth paragraph.)
Jan. 25 (Bloomberg) -- VMware Inc., the largest maker of programs that let computers run multiple operating systems, fell in trading today after saying margins would be flat this year and forecasting a slowdown in new license sales.
New license sales, a predictor of future revenue, may rise between 14 percent to 19 percent in 2011, VMware said yesterday in a statement. That’s a slowdown from last year, when new licenses rose 36 percent.
“The license growth is likely lower than most were expecting,” Walter Pritchard, an analyst at Citigroup Inc. in San Francisco, said in a note to clients. Pritchard has a “hold” rating on VMware shares.
Operating margins may not expand in 2011, VMware also said. The company, majority-owned by EMC Corp., plans to spend more on staff and on international expansion, Chief Financial Officer Mark Peek said on a conference call with analysts.
“We are building our investment model assuming we’ll rapidly continue to hire high quality engineering talent and to expand our international market opportunity,” Peek said. “We expect to be investing heavily in people throughout the year.”
VMware, based in Palo Alto, California, fell $3.45, or 3.9 percent, to $84.28 as of 4 p.m. in New York Stock Exchange composite trading. The shares more than doubled last year.
Revenue this quarter will be $800 million to $820 million, VMware said. That compares with $786 million, the average estimate of analysts surveyed by Bloomberg.
Chief Executive Officer Paul Maritz said in a statement that results were buoyed by demand for software that helps customers cut costs of data centers, the server farms that deliver storage and other computing tasks over the Internet. VMware specializes in so-called virtualization software, which is designed to make computers operate more efficiently.
--With assistance from Dina Bass in New York. Editor: Tom Giles, Lisa Wolfson
To contact the reporter on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net.
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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(Updates with closing share price in sixth paragraph.)
Jan. 25 (Bloomberg) -- VMware Inc., the largest maker of programs that let computers run multiple operating systems, fell in trading today after saying margins would be flat this year and forecasting a slowdown in new license sales.
New license sales, a predictor of future revenue, may rise between 14 percent to 19 percent in 2011, VMware said yesterday in a statement. That’s a slowdown from last year, when new licenses rose 36 percent.
“The license growth is likely lower than most were expecting,” Walter Pritchard, an analyst at Citigroup Inc. in San Francisco, said in a note to clients. Pritchard has a “hold” rating on VMware shares.
Operating margins may not expand in 2011, VMware also said. The company, majority-owned by EMC Corp., plans to spend more on staff and on international expansion, Chief Financial Officer Mark Peek said on a conference call with analysts.
“We are building our investment model assuming we’ll rapidly continue to hire high quality engineering talent and to expand our international market opportunity,” Peek said. “We expect to be investing heavily in people throughout the year.”
VMware, based in Palo Alto, California, fell $3.45, or 3.9 percent, to $84.28 as of 4 p.m. in New York Stock Exchange composite trading. The shares more than doubled last year.
Revenue this quarter will be $800 million to $820 million, VMware said. That compares with $786 million, the average estimate of analysts surveyed by Bloomberg.
Chief Executive Officer Paul Maritz said in a statement that results were buoyed by demand for software that helps customers cut costs of data centers, the server farms that deliver storage and other computing tasks over the Internet. VMware specializes in so-called virtualization software, which is designed to make computers operate more efficiently.
--With assistance from Dina Bass in New York. Editor: Tom Giles, Lisa Wolfson
To contact the reporter on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net.
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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