VMware Sales Paced by Services Segment

VMware Inc. posted better-than-expected adjusted earnings and revenue, boosted by its services business, as the virtualization software vendor prepares to shift reporting periods following the merger between parent EMC Corp. and Dell Inc.

The $60 billion deal, announced October 2015, took nearly 11 months to complete. Dell and its partner, investment firm Silver Lake, raised more than $40 billion in debt.

Dell, which is privately held, purchased not only EMC but its Byzantine federation of wholly and partially owned subsidiaries. Those include cybersecurity firm RSA Security LLC, software-development company Pivotal Software Inc., cloud-software company Virtustream and VMware, which will remain public.

VMware will transition to the Dell fiscal year beginning Feb. 4. As a result, the company's first quarter will end May 5.

VMware also announced the formation of a new organization focused on products and cloud services. Raghu Raghuram and Rajiv Ramaswami will co-lead this new organization.

For the quarter, VMware earned $319 million, or 75 cents a share, compared with $256 million, or 60 cents a share, a e year earlier. Excluding certain items, adjusted per-share earnings were $1.14, up from $1.02.

Sales rose 6.3% to $1.78 billion, paced by climbing sales in its services business, up to $1.09 billion from $991 million a year earlier. License revenue climbed to $691 million from $681 million.

Analysts had expected adjusted earnings of $1.10 a share on $1.76 billion in revenue.

Shares of the VMware, up nearly 23% for the year, were inactive after hours.

Earlier in the year, the Palo Alto, Calif., company launched a restructuring plan that aimed to cut as many as 800 positions. And earlier this month, Amazon.com Inc.'s cloud-computing unit signed a deal with VMware to offer companies the ability to run their computing operations on both their own VMware-equipped data centers and Amazon's web-based servers.

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

October 26, 2016 18:15 ET (22:15 GMT)

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