VMware Stock Wavers As Earnings Top Estimates Amid Shift To Cloud


VMware stock wavered late Tuesday as earnings and revenue for the October quarter topped analyst estimates despite weakness in its on-premise business during the coronavirus pandemic. The enterprise software maker also raised fiscal 2021 guidance.


VMware (VMW) said adjusted earnings were $1.66 a share, up 17% from a year ago, with revenue rising 8% to $2.86 billion. A year earlier, VMware earnings were $1.49 a share on sales of $2.46 billion.

Analysts expected VMware earnings of $1.43 a share on sales of $2.81 billion for the period ended Oct. 31.

VMware stock slipped a fraction to near 150 after initially trading up in after-hours trading on the stock market today. Dell Technologies (DELL) holds a majority stake in VMware.

Heading into the VMware earnings report, the software stock had a Relative Strength Rating of only 35 out of a possible 99, according to IBD Stock Checkup. However, VMware stock has forged a possibly bullish double-bottom base, with an entry point of 157.58.

VMware Stock

VMware said subscription revenue rose 44% to $676 million in the October quarter vs. estimates of $638 million. Subscription revenue topped on-premise license revenue for the first time, the company said.

For fiscal 2021, VMware raised its revenue outlook to $11.7 billion vs. estimates of $11.62 billion.

VMware’s virtualization software is widely used in corporate data centers. The software enables computer servers to run different operating systems and apps, and share workloads.

However, on-premise sales have slowed as companies spend more on cloud services to support remote work. As a result, VMware stock has underperformed most software companies during the Covid-19 crisis.

VMware has been transitioning to a cloud-computing business model. Its cloud partners include Amazon Web Services, part of Amazon.com (AMZN).

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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