Palo Alto, California – (The Hosting News) – February 2, 2009 – Virtualization solutions firm, VMware, Inc., has released its financial results for the fourth quarter and full year of 2008, citing annual revenue growth of 42% to $1.9 Billion.

In addition, the company reported annual GAAP operating margin of 17%, and non-GAAP operating margin of 25% .

Paul Maritz, President and Chief Executive Officer of VMware remarked, ”VMware delivered a solid fourth quarter to cap off a successful 2008.& We have been executing well in a difficult economy. Customers continue to make VMware a strategic priority because our solutions – used by more than 130,000 customers – help reduce capital and operational costs.”

Highlights include:

• Revenues for the fourth quarter were $515 million, an increase of 25% from the fourth quarter of 2007.
• GAAP operating income for the fourth quarter was $102 million, an increase of 34% from the fourth quarter of 2007. Non-GAAP operating income for the fourth quarter was $135 million, an increase of 25% from the fourth quarter of 2007.
• GAAP net income for the fourth quarter was $111 million, or $0.29 per diluted share, compared to $78 million, or $0.19 per diluted share, for the fourth quarter of 2007. Non-GAAP net income for the quarter was $142 million, or $0.36 per diluted share, compared to $103 million, or $0.26 per diluted share, for the fourth quarter of 2007.
• Revenues for the full year 2008 were $1.9 billion, an increase of 42% from 2007.
• GAAP operating income for the full fiscal year 2008 was $313 million, an increase of 33% from 2007. Non-GAAP operating income for the year 2008 was $469 million, an increase of 39% from 2007.
• GAAP net income for the full fiscal year 2008 was $290 million, or $0.73 per diluted share, compared to $218 million, or $0.61 per diluted share, for 2007. Non-GAAP net income for the year 2008 was $416 million, or $1.05 per diluted share, compared to $295 million, or $0.82 per diluted share, for 2007.
• Cash was more than $1.8 billion and deferred revenue was $870 million as of December 31, 2008. Since the beginning of 2008, cash increased 50% and deferred revenue increased 57%.

U.S. revenues for 2008 grew 37% to $988 million from 2007. International revenues grew 48% to $893 million from 2007.

License revenues for 2008 grew 30% to $1.2 billion from 2007.Services revenues grew 67% to $703 million from 2007.

Fourth Quarter Highlights and Strategic Announcements

• General availability of VMware View 3.0, a major advance in virtual desktop computing. With VMware View 3, IT organizations can decouple a desktop from specific physical devices or locations to create a personalized view of a user’s desktop, applications, and data – called ‘myView’ that is securely accessible from almost any device, at any time. By hosting these virtual desktop images in the datacenter using the industry-leading virtualization and management platform, VMware Infrastructure 3, VMware View 3 enables IT personnel to provision and manage thousands of virtual desktops simply, securely, and with substantially lower operating costs.
• VMware vCloud Initiative – Major service providers worldwide, including Atos Origin, SunGard, and Terremark, are delivering enterprise cloud services that are built on the VMware platform, along with complementary management services from VMware vCenter Lab Manager and VMware vCenter Site Recovery Manager. Customers running on the VMware platform are tapping into these enterprise clouds to extend their VMware investments and gain the benefits of cloud computing for their existing applications and environments.
• VMware expanded its strategic relationships with key partners in IT management to help enterprises optimize the operating efficiency of their virtualized datacenters. With BMC Software, we entered into a reseller agreement and commenced joint development of an integrated management solution including VMware vCenter Lifecycle Manager and BMC’s Remedy IT Service Management (ITSM) products. With CA, we signed an agreement to make CA Data Center Automation Manager interoperable with VMware vCenter Stage Manager. We also announced plans to work with HP to integrate HP’s Business Technology Optimization (BTO) software with VMware vCenter Lab Manager to bring enhanced self-service capabilities to virtual datacenter operating system (VDC-OS) environments.
• VMware Mobile Virtualization Platform (MVP) – building on innovative technology acquired from Trango Virtual Processors in October 2008, VMware MVP will help handset vendors reduce development time and get mobile phones with value-added services to market faster. In addition, end users will benefit by being able to run multiple profiles – for example, one for personal use and one for work use – on the same phone.

Financial Outlook

The following forward-looking statements are based on current expectations and are subject to uncertainties and risks discussed below and in documents filed by VMware with the United States Securities and Exchange Commission. Actual results may differ materially.

Current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that VMware’s actual results could differ materially from expectations. Because of this uncertainty, VMware is not providing revenue guidance for the full year 2009.

• For the first quarter of 2009, VMware is planning for total revenues of approximately $475 million.
• For 2009, the targeted GAAP tax rate is expected to be between 16 and 18 percent. This guidance includes stock-based compensation, amortization of intangibles, and FAS86 capitalization, representing 4 – 5 percentage points. This tax rate guidance does not reflect the impact of potential acquisitions.

VMware plans to host a conference call today to review its fourth quarter and full year 2008 results and to discuss its financial outlook.& The call is scheduled to begin at 2:00 p.m. PT/ 5:00 p.m. ET and can be accessed via the Web at http://ir.vmware.com. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 30 days.

In 2008, we made strategic investments in our technology, partnerships and business operations that position us well for 2009 and beyond,

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