VMware Third Quarter Earnings Sneak Peek

VMware (NYSE:VMW) will unveil its latest earnings on Tuesday, October 23, 2012. VMWare is a provider of virtual infrastructure software solutions from the desktop to the data center. It works with more than 1,300 technology partners, including leading server, microprocessor, storage, networking and software vendors.

VMware Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of 43 cents per share, a rise of 38.7% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from 46 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 43 cents during the last month. Analysts are projecting profit to rise by 26% compared to last year’s $1.94.

Past Earnings Performance: Last quarter, the company reported profit of 50 cents per share versus a mean estimate of net income of. The company has beaten estimates for the past three quarters.

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Wall St. Revenue Expectations: Analysts predict a rise of 20% in revenue from the year-earlier quarter to $1.13 billion.

A Look Back: In the second quarter, profit fell 12.9% to $191.7 million (44 cents a share) from $220.2 million (51 cents a share) the year earlier, but exceeded analyst expectations. Revenue rose 21.9% to $1.12 billion from $921.2 million.

Stock Price Performance: Between September 19, 2012 and October 17, 2012, the stock price dropped $11.96 (-12.1%), from $99.25 to $87.29. The stock price saw one of its best stretches over the last year between January 4, 2012 and January 11, 2012, when shares rose for six straight days, increasing 7.7% (+$6.25) over that span.

Key Stats:

With double-digit revenue growth the past four quarters, this earnings release is a chance to keep that positive trend going. The company has averaged year-over-year revenue growth of 26.4% over the last four quarters.

After last quarter’s profit drop broke a string of income increases, this earnings announcement is definitely a chance for a rebound. Net income rose more than twofold in the third quarter of the last fiscal year, 67.2% in the fourth quarter of the last fiscal year and 52.2% in the first quarter before declining in the second quarter.

Analyst Ratings: There are 18 out of 29 analysts surveyed (62.1%) rating VMware a buy.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.56 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 2.62 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 7.6% to $2.52 billion while assets rose 4.9% to $6.44 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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