VMware's third-quarter profit dropped by more than half as the company invested more heavily in research and development, though its revenue increased 4 percent from a year earlier, the company said Wednesday. Including one-time items, the company made a profit of $95 million, or $0.24 per share, better than the $0.20 per share analysts had been expecting, according to Thomson Reuters. Net income for the quarter ended Sept. 30 was US$38 million, or $0.09 per share, down from $83 million, or $0.21 per share, in the third quarter of 2008, VMware said.
Revenue for the quarter was $490 million, up from $472 million for the same period last year. The economy remains challenging but VMware now has better visibility into the coming quarters, Chief Financial Officer Mark Peek said in a statement. Analysts had been expecting $474 million in revenue, Thomson Reuters said. He forecast fourth-quarter revenue of $540 million to $560 million, ahead of current estimates, but said revenue in the first quarter next year is likely to be down sequentially. Sales and marketing expenses also climbed, as the company continued to promote a new version of its virtualization software, vSphere 4. "Our solid third-quarter results were driven by strength in the U.S. federal sector, increased transaction volumes and particularly robust growth in our maintenance renewals," Peek said in the statement. VMware spent $133.5 million on R&D during the quarter, up from $85 million in the same period last year.
A 1 percent drop in revenue from the U.S. was more than offset by a 9 percent increase in international sales, VMware said. Services revenue, which includes maintenance fees and professional services, climbed 33 percent to $249 million, while revenue from new software licenses declined 16 percent to $240 million.