Seguridad Mania.com - España y América Latina

PALO ALTO, CA -- (Marketwire) -- 07/23/12 -- VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the second quarter of 2012:

• Revenues for the second quarter were $1.12 billion, an increase of 22% from the second quarter of 2011, and 23% measured in constant currency.
  
  
• Operating income for the second quarter was $212 million, an increase of 13% from the second quarter of 2011. Non-GAAP operating income for the second quarter was $358 million, an increase of 23% from the second quarter of 2011.
  
  
• Net income for the second quarter was $192 million, or $0.44 per diluted share, compared to $220 million, or $0.51 per diluted share, for the second quarter of 2011. Non-GAAP net income for the quarter was $296 million, or $0.68 per diluted share, compared to $235 million, or $0.55 per diluted share, for the second quarter of 2011.
  
  
• Trailing twelve months operating cash flows were $2.05 billion, an increase of 33%. Trailing twelve months free cash flows were $2.01 billion, an increase of 29%.
  
  
• Cash, cash equivalents and short-term investments were $5.3 billion and unearned revenue was $2.9 billion as of June 30, 2012.
  
  

U.S. revenues for the second quarter of 2012 grew 22% to $551 million from 2011. International revenues grew 22% to $572 million from 2011.

License revenues for the second quarter of 2012 were $517 million, an increase of 11% from 2011. Service revenues, which include software maintenance and professional services, were $606 million for 2012, an increase of 33% from 2011.

"The quarter's strong performance reflects the continued confidence customers have in our solutions," said Paul Maritz, chief executive officer, VMware. "Our products, amplified by the recent acquisitions, including Nicira, are providing the means for our customers to transform IT as we move into the Cloud Era."

"We are very pleased with our second quarter results," said Carl Eschenbach, chief operating officer, VMware. "Despite the tough market conditions, we achieved record quarterly results in total revenue, license revenue, and non-GAAP operating income. Third quarter 2012 revenues are expected to be in the range of $1.11 and $1.15 billion. Annual 2012 revenues are expected to be in the range of $4.540 and $4.635 billion, an increase of 20.5% to 23.0% from 2011. Annual license revenues are expected to grow between 11% and 15%."

Recent Highlights & Strategic Announcements

• Today, July 23, 2012 VMware announced the acquisition of Nicira, Inc., a pioneer in software-defined networking and a leader in network virtualization for open source initiatives. VMware will acquire Nicira for approximately $1.05 billion in cash plus approximately $210 million of assumed unvested equity awards. The acquisition is a key part of VMware's vision for delivering the software-defined datacenter.
  
  
• In June 2012, VMware announced that it has been positioned by Gartner, Inc. in the Leaders Quadrant of the 2012 Magic Quadrant for x86 Server Virtualization Infrastructure. According to Gartner, "The x86 server virtualization infrastructure market is the foundation for two extremely important market trends that relate and overlap: infrastructure modernization and cloud computing. ...Virtualization is a fundamental enabler to IaaS, and will be used to establish private cloud services, public cloud services and interoperable hybrid cloud services."
  
  
• Recent product announcements included: VMware vFabric™ Suite 5.1, featuring new capabilities that automate the deployment and management of complex applications on VMware cloud infrastructure and the introduction of an in-memory distributed SQL database. VMware View™ 5.1 and an updated portfolio of end-user computing solutions, including Horizon Application Manager™ 1.5 and VMware Project Octopus Beta, that will help IT organizations empower a more agile, productive and connected enterprise.
  
  
• Recently, VMware closed two acquisitions: DynamicOps, a provider of cloud automation solutions that enable provisioning and management of IT services across heterogeneous environments including VMware-based private and public clouds, physical infrastructures, multiple hypervisors and Amazon Web Services, and Wanova, a leading provider of physical desktop management solutions. With Wanova, VMware now offers leading solutions for centralized image management of both physical and virtual desktops.
  
  

VMware plans to host a conference call today to review its second quarter 2012 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 60 days.

About VMware

VMware is the leader in virtualization and cloud infrastructure solutions that enable businesses to thrive in the Cloud Era. Customers rely on VMware to help them transform the way they build, deliver and consume Information Technology resources in a manner that is evolutionary and based on their specific needs. With 2011 revenues of $3.77 billion, VMware has more than 350,000 customers and 50,000 partners. The company is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com.

VMware, VMware vFabric, VMware View, and Horizon Application Manager are registered trademarks or trademarks of VMware, Inc. in the United States and other jurisdictions. Other marks mentioned herein are trademarks, which are proprietary to VMware, Inc. or another company.

*Gartner, Inc., Magic Quadrant for x86 Server Virtualization Infrastructure, Thomas J. Bittman, et al, June 11, 2012. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to VMware's financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled "About Non-GAAP Financial Measures."

Forward-Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding VMware's third quarter and annual revenue and license revenue projections, our expectations for growth and leadership in virtualization and cloud infrastructure, the consummation of Nicira acquisition, the opportunities VMware expects from these acquisitions, the planned integration of acquired company technologies with VMware product offerings and the prospective benefits to customers, important IT market trends and the role of VMware products in the transformation to the Cloud Era and expected benefits to customers of newly available VMware products and services, such as VMware vFabric Suit 5.1, VMware View 5.1, Horizon Application Manager 1.5 and VMware Project Octopus Betas. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) the satisfaction of closing conditions for the Nicira transaction; (ii) adverse changes in general economic or market conditions; (iii) delays or reductions in consumer or information technology spending; (iv) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization market, and new product and marketing initiatives by our competitors; (v) factors that affect timing of license revenue recognition such as product announcements and promotions and beta programs; (vi) our customers' ability to develop, and to transition to, new products and computing strategies such as cloud computing and desktop virtualization; (vii) the uncertainty of customer acceptance of emerging technology; (viii) changes in the willingness of customers to enter into longer term licensing and support arrangements; (ix) rapid technological and market changes in virtualization software and platforms for cloud and desktop computing; (x) changes to product development timelines; (xi) VMware's relationship with EMC Corporation and EMC's ability to control matters requiring stockholder approval, including the election of VMware's board members; (xii) our ability to protect our proprietary technology; (xiii) our ability to attract and retain highly qualified employees; (xiv) the successful integration of acquired companies and assets into VMware; and (xv) fluctuating currency exchange rates. These forward looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q and current reports on Form 8-K that we may file from time to time, which could cause actual results to vary from expectations. VMware assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

                                VMware, Inc.

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)
                                (unaudited)

                           For the Three Months
                                   Ended           For the Six Months Ended
                                 June 30,                  June 30,
                         ------------------------  ------------------------
                             2012         2011         2012         2011
                         -----------  -----------  -----------  -----------

Operating activities:
Net income               $   191,729  $   220,158  $   383,165  $   345,970
Adjustments to reconcile
 net income to net cash
 provided by operating
 activities:
  Depreciation and
   amortization               89,392       74,709      175,158      155,658
  Stock-based
   compensation,
   excluding amounts
   capitalized               100,900       85,442      182,706      166,015
  Excess tax benefits
   from stock-based
   compensation              (32,701)    (101,256)     (86,383)    (151,264)
  Gain on sale of
   Terremark investment            -      (56,000)           -      (56,000)
  Other                          373        2,864         (555)       3,826
  Changes in assets and
   liabilities, net of
   acquisitions:
    Accounts receivable      (91,296)     (54,757)     135,254       26,583
    Other assets             (69,444)     (16,133)    (117,150)     (34,053)
    Due to/from EMC, net     (43,403)     (35,265)      12,145       25,435
    Accounts payable           4,894      (11,105)      17,419       (1,707)
    Accrued expenses          95,753      102,780          936       34,211
    Income taxes
     receivable from EMC           -      141,000            -      176,444
    Income taxes payable      12,367        4,674       67,733       37,601
    Deferred income
     taxes, net               (1,416)      11,119      (36,371)        (958)
    Unearned revenue         134,177       94,566      233,872      212,952
                         -----------  -----------  -----------  -----------
Net cash provided by
 operating activities        391,325      462,796      967,929      940,713
                         -----------  -----------  -----------  -----------

Investing activities:
Additions to property
 and equipment               (44,336)     (95,186)     (78,007)    (122,232)
Purchase of leasehold
 interest                          -     (173,126)           -     (173,126)
Capitalized software
 development costs                 -      (25,437)           -      (52,859)
Purchases of available-
 for-sale securities      (1,253,605)    (529,038)  (1,955,068)  (1,127,805)
Sales of available-for-
 sale securities             348,437      223,491      770,754      376,588
Maturities of available-
 for-sale securities         277,099      277,390      534,076      492,969
Sale of strategic
 investments                       -       76,000            -       78,513
Business acquisitions,
 net of cash acquired       (102,166)    (189,138)    (102,166)    (204,088)
Transfer of net assets
 under common control              -       (7,973)           -      (20,463)
Other investing               (2,677)      31,858       (4,174)     (27,142)
                         -----------  -----------  -----------  -----------
Net cash used in
 investing activities       (777,248)    (411,159)    (834,585)    (779,645)
                         -----------  -----------  -----------  -----------

Financing activities:
Proceeds from issuance
 of common stock              33,554      110,543      144,595      200,714
Repurchase of common
 stock                      (178,195)    (132,660)    (178,195)    (280,389)
Excess tax benefits from
 stock-based
 compensation                 32,701      101,256       86,383      151,264
Shares repurchased for
 tax withholdings on
 vesting of restricted
 stock                       (51,346)     (48,666)     (64,983)     (70,578)
                         -----------  -----------  -----------  -----------
Net cash provided by
 (used in) financing
 activities                 (163,286)      30,473      (12,200)       1,011
                         -----------  -----------  -----------  -----------
Net increase (decrease)
 in cash and cash
 equivalents                (549,209)      82,110      121,144      162,079
Cash and cash
 equivalents at
 beginning of the period   2,626,109    1,708,934    1,955,756    1,628,965
                         -----------  -----------  -----------  -----------
Cash and cash
 equivalents at end of
 the period              $ 2,076,900  $ 1,791,044  $ 2,076,900  $ 1,791,044
                         ===========  ===========  ===========  ===========



                                VMware, Inc.

                     CONSOLIDATED STATEMENTS OF INCOME
                  (in thousands, except per share amounts)
                                (unaudited)

                           For the Three Months
                                   Ended           For the Six Months Ended
                                 June 30,                  June 30,
                         ------------------------  ------------------------
                             2012         2011         2012         2011
                         -----------  -----------  -----------  -----------

Revenues:
  License                $   517,222  $   464,806  $   999,149  $   883,805
  Services                   605,804      456,404    1,179,059      881,126
                         -----------  -----------  -----------  -----------
Total revenues             1,123,026      921,210    2,178,208    1,764,931
Operating expenses (1):
  Cost of license
   revenues                   56,553       48,928      113,296      104,946
  Cost of services
   revenues                  122,669      103,547      236,841      197,426
  Research and
   development               248,594      189,241      470,984      358,404
  Sales and marketing        391,501      314,560      754,913      617,484
  General and
   administrative             91,799       78,042      173,099      146,277
                         -----------  -----------  -----------  -----------
Operating income             211,910      186,892      429,075      340,394
Investment income              6,945        3,715       12,688        7,121
Interest expense with
 EMC                          (1,158)        (972)      (2,445)      (1,931)
Other income (expense),
 net                          (3,560)      56,639       (1,275)      56,804
                         -----------  -----------  -----------  -----------
Income before income
 taxes                       214,137      246,274      438,043      402,388
Income tax provision          22,408       26,116       54,878       56,418
                         -----------  -----------  -----------  -----------
Net income               $   191,729  $   220,158  $   383,165  $   345,970
                         ===========  ===========  ===========  ===========

Net income per weighted-
 average share, basic
 for Class A and Class B $      0.45  $      0.52  $      0.90  $      0.83

Net income per weighted-
 average share, diluted
 for Class A and Class B $      0.44  $      0.51  $      0.88  $      0.80

Weighted-average shares,
 basic for Class A and
 Class B                     427,223      419,657      426,106      418,557
Weighted-average shares,
 diluted for Class A and
 Class B                     434,647      430,473      434,014      429,984
______
(1) Includes stock-based
 compensation as
 follows:
  Cost of license
   revenues              $       524  $       438  $       964  $       904
  Cost of services
   revenues                    7,103        5,740       12,922       11,328
  Research and
   development                48,027       46,074       87,404       87,958
  Sales and marketing         33,883       23,264       59,117       45,787
  General and
   administrative             11,363        9,926       22,299       20,038



                                VMware, Inc.

                         CONSOLIDATED BALANCE SHEETS
                  (in thousands, except per share amounts)
                                 (unaudited)

                                                     June 30,   December 31,
                                                       2012         2011
                                                   ------------ ------------

                      ASSETS
Current assets:
  Cash and cash equivalents                        $  2,076,900 $  1,955,756
  Short-term investments                              3,269,969    2,556,450
  Accounts receivable, net of allowance for
   doubtful accounts of $2,942 and $3,794               748,698      882,857
  Due from EMC, net                                      61,654       73,799
  Deferred tax asset                                    151,704      128,471
  Other current assets                                  127,528       80,439
                                                   ------------ ------------
Total current assets                                  6,436,453    5,677,772
Property and equipment, net                             553,124      525,490
Capitalized software development costs, net and
 other                                                  109,532      154,236
Deferred tax asset                                      172,190      156,855
Intangible assets, net                                  402,425      407,375
Goodwill                                              1,827,068    1,759,080
                                                   ------------ ------------
    Total assets                                   $  9,500,792 $  8,680,808
                                                   ============ ============

       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                 $     77,026 $     49,747
  Accrued expenses and other                            590,268      587,650
  Unearned revenues                                   1,850,681    1,764,109
                                                   ------------ ------------
Total current liabilities                             2,517,975    2,401,506
Note payable to EMC                                     450,000      450,000
Unearned revenues                                     1,091,709      944,309
Other liabilities                                       120,415      114,711
                                                   ------------ ------------
    Total liabilities                                 4,180,099    3,910,526
Commitments and contingencies
Stockholders' equity:
  Class A common stock, par value $.01; authorized
   2,500,000 shares; issued and outstanding
   127,264 and 123,610 shares                             1,273        1,236
  Class B convertible common stock, par value
   $.01; authorized 1,000,000 shares; issued and
   outstanding 300,000 shares                             3,000        3,000
  Additional paid-in capital                          3,377,466    3,212,264
  Accumulated other comprehensive income                  3,183        1,176
  Retained earnings                                   1,935,771    1,552,606
                                                   ------------ ------------
    Total stockholders' equity                        5,320,693    4,770,282
                                                   ------------ ------------
      Total liabilities and stockholders' equity   $  9,500,792 $  8,680,808
                                                   ============ ============



                                VMware, Inc.

                   RECONCILIATION OF GAAP TO NON-GAAP DATA
                  For the Three Months Ended June 30, 2012
                  (in thousands, except per share amounts)
                                 (unaudited)

                                                  Employer
                                               Payroll Taxes
                                                on Employee
                                 Stock-Based       Stock        Intangible
                        GAAP     Compensation   Transactions   Amortization
                      --------  -------------  -------------  -------------

Operating expenses:
Cost of license
 revenues             $ 56,553           (524)           (20)       (13,749)
Cost of services
 revenues             $122,669         (7,103)          (393)        (1,098)
Research and
 development          $248,594        (48,027)        (2,131)          (751)
Sales and marketing   $391,501        (33,883)        (1,440)        (2,928)
General and
 administrative       $ 91,799        (11,363)          (459)             -

Operating income      $211,910        100,900          4,443         18,526
Operating margin          18.9%           9.0%           0.5%           1.6%

Income before income
 taxes                $214,137        100,900          4,443         18,526

Income tax provision  $ 22,408
Tax rate                  10.5%

Net income            $191,729        100,900          4,443         18,526

Net income per
 weighted-average
 share, basic for
 Class A and Class B
 (3)                  $   0.45  $        0.24  $        0.01  $        0.04

Net income per
 weighted-average
 share, diluted for
 Class A and Class B
 (4)                  $   0.44  $        0.23  $        0.01  $        0.04

table continued below

                       Acquisition    Capitalized
                         Related        Software        Tax      Non-GAAP,
                        Items and     Development    Adjustment     as
                          Other        Costs (1)        (2)      adjusted
                      -------------  -------------  -----------  --------

Operating expenses:
Cost of license
 revenues                         -        (20,760)           -  $ 21,500
Cost of services
 revenues                         -              -            -  $114,075
Research and
 development                      -              -            -  $197,685
Sales and marketing               -              -            -  $353,250
General and
 administrative              (1,640)             -            -  $ 78,337

Operating income              1,640         20,760            -  $358,179
Operating margin                0.1%           1.8%           -      31.9%

Income before income
 taxes                        1,640         20,760            -  $360,406

Income tax provision                                     42,465  $ 64,873
Tax rate                                                             18.0%

Net income                    1,640         20,760      (42,465) $295,533

Net income per
 weighted-average
 share, basic for
 Class A and Class B
 (3)                  $           -  $        0.05  $     (0.10) $   0.69

Net income per
 weighted-average
 share, diluted for
 Class A and Class B
 (4)                  $           -  $        0.05  $     (0.09) $   0.68

(1)  For the second quarter of 2012, no costs were capitalized for the
development of software products. Amortization expense from previously
capitalized amounts was $20.8 million for the second quarter of 2012.

(2) Non-GAAP financial information for the quarter is adjusted for a tax
rate equal to our annual estimated tax rate on non-GAAP income. This rate is
based on our estimated annual GAAP income tax rate forecast, adjusted to
account for items excluded from GAAP income in calculating the non-GAAP
financial measures presented above. Our estimated tax rate on non-GAAP
income is determined annually and may be adjusted during the year to take
into account events or trends that we believe materially impact the
estimated annual rate including, but not limited to, significant changes
resulting from tax legislation, material changes in the geographic mix of
revenues and expenses and other significant events. Due to the differences
in the tax treatment of items excluded from non-GAAP earnings, as well as
the methodology applied to our estimated annual tax rates as described
above, our estimated tax rate on non-GAAP income may differ from our GAAP
tax rate and from our actual tax liabilities.

(3) Calculated based upon 427,223 basic weighted-average shares for Class A
and Class B.

(4) Calculated based upon 434,647 diluted weighted-average shares for Class
A and Class B.



                                VMware, Inc.

                   RECONCILIATION OF GAAP TO NON-GAAP DATA
                  For the Three Months Ended June 30, 2011
                  (in thousands, except per share amounts)
                                 (unaudited)

                                        Employer
                                        Payroll
                                         Taxes
                                      on Employee               Acquisition
                         Stock-Based     Stock      Intangible    Related
                 GAAP    Compensation Transactions Amortization    Items
               --------  -----------  -----------  -----------  -----------

Operating
 expenses:
Cost of
 license
 revenues      $ 48,928         (438)         (43)     (11,104)           -
Cost of
 services
 revenues      $103,547       (5,740)        (502)      (1,242)           -
Research and
 development   $189,241      (46,074)      (3,773)        (797)           -
Sales and
 marketing     $314,560      (23,264)      (2,254)      (2,426)           -
General and
administrative $ 78,042       (9,926)        (618)         (36)      (1,210)

Operating
 income        $186,892       85,442        7,190       15,605        1,210
Operating
 margin            20.3%         9.3%         0.8%         1.7%         0.1%

Other income,
 net           $ 56,639

Income before
 income taxes  $246,274       85,442        7,190       15,605        1,210

Income tax
 provision     $ 26,116
Tax rate           10.6%

Net income     $220,158       85,442        7,190       15,605        1,210

Net income per
 weighted-
 average
 share, basic
 for Class A
 and Class B
 (4)           $   0.52  $      0.20  $      0.02  $      0.04  $         -

Net income per
 weighted-
 average
 share,
 diluted for
 Class A and
 Class B (5)   $   0.51  $      0.20  $      0.02  $      0.04  $         -


table continued below


                            Stock-Based
                            Compensatiom
               Capitalized  Included in    Gain on
                 Software   Capitalized    sale of       Tax      Non-GAAP,
               Development    Software    Terremark   Adjustment      as
                Costs (1)   Development      (2)         (3)       adjusted
               -----------  -----------  ----------  -----------  ---------

Operating
 expenses:
Cost of
 license
 revenues          (19,807)           -           -            -  $  17,536
Cost of
 services
 revenues                -            -           -            -  $  96,063
Research and
 development        29,594       (4,157)          -            -  $ 164,034
Sales and
 marketing               -            -           -            -  $ 286,616
General and
 administrative          -            -           -            -  $  66,252

Operating
 income             (9,787)       4,157           -            -  $ 290,709
Operating
 margin               -1.2%         0.6%          -            -       31.6%

Other income,
 net                                        (56,000)              $     639

Income before
 income taxes       (9,787)       4,157     (56,000)           -  $ 294,091

Income tax
 provision                                                32,702  $  58,818
Tax rate                                                               20.0%

Net income          (9,787)       4,157     (56,000)     (32,702) $ 235,273

Net income per
 weighted-
 average
 share, basic
 for Class A
 and Class B
 (4)           $     (0.02) $      0.01  $    (0.13) $     (0.08) $    0.56

Net income per
 weighted-
 average
 share,
 diluted for
 Class A and
 Class B (5)   $     (0.02) $      0.01  $    (0.13) $     (0.08) $    0.55


(1)  For the second quarter of 2011, we capitalized $29.6 million (including
$4.2 million of stock-based compensation) of costs incurred for the
development of software products. Amortization expense from capitalized
amounts was $19.8 million for the second quarter of 2011.

(2) VMware realized a gain of $56.0 million on the sale of its investment in
Terremark Worldwide, Inc.

(3) Non-GAAP financial information for the quarter is adjusted for a tax
rate equal to our annual estimated tax rate on non-GAAP income. This rate is
based on our estimated annual GAAP income tax rate forecast, adjusted to
account for items excluded from GAAP income in calculating the non-GAAP
financial measures presented above. Our estimated tax rate on non-GAAP
income is determined annually and may be re-calculated during the year to
take into account events or trends that we believe materially impact the
estimated annual rate including, but not limited to, significant changes
resulting from tax legislation, tax audit closures, material changes in the
geographic mix of revenues and expenses and other significant events. Due to
the differences in the tax treatment of items excluded from non-GAAP
earnings, as well as the methodology applied to our estimated annual tax
rates as described above, our estimated tax rate on non-GAAP income may
differ from our GAAP tax rate and from our actual tax liabilities.

(4) Calculated based upon 419,657 basic weighted-average shares for Class A
and Class B.

(5) Calculated based upon 430,473 diluted weighted-average shares for Class
A and Class B.



                                VMware, Inc.

                   RECONCILIATION OF GAAP TO NON-GAAP DATA
                   For the Six Months Ended June 30, 2012
                  (in thousands, except per share amounts)
                                 (unaudited)

                                                  Employer
                                               Payroll Taxes
                                                on Employee
                                 Stock-Based       Stock        Intangible
                        GAAP     Compensation   Transactions   Amortization
                     ---------  -------------  -------------  -------------

Operating expenses:
Cost of license
 revenues            $ 113,296           (964)           (36)       (27,028)
Cost of services
 revenues            $ 236,841        (12,922)          (847)        (2,196)
Research and
 development         $ 470,984        (87,404)        (4,054)        (1,502)
Sales and marketing  $ 754,913        (59,117)        (3,439)        (5,860)
General and
 administrative      $ 173,099        (22,299)          (841)             -

Operating income     $ 429,075        182,706          9,217         36,586
Operating margin          19.7%           8.4%           0.3%           1.7%

Income before income
 taxes               $ 438,043        182,706          9,217         36,586

Income tax provision $  54,878
Tax rate                  12.5%

Net income           $ 383,165        182,706          9,217         36,586

Net income per
 weighted-average
 share, basic for
 Class A and Class B
 (3)                 $    0.90  $        0.43  $        0.02  $        0.09

Net income per
 weighted-average
 share, diluted for
 Class A and Class B
 (4)                 $    0.88  $        0.42  $        0.02  $        0.08


table continued below


                      Acquisition    Capitalized
                        Related        Software         Tax       Non-GAAP,
                       Items and     Development     Adjustment       as
                         Other        Costs (1)         (2)        adjusted
                     -------------  -------------  -------------  ---------

Operating expenses:
Cost of license
 revenues                        -        (42,598)             -  $  42,670
Cost of services
 revenues                        -              -              -  $ 220,876
Research and
 development                     -              -              -  $ 378,024
Sales and marketing              -              -              -  $ 686,497
General and
 administrative             (1,679)             -              -  $ 148,280

Operating income             1,679         42,598              -  $ 701,861
Operating margin               0.1%           2.0%             -       32.2%

Income before income
 taxes                       1,679         42,598              -  $ 710,829

Income tax provision                                      73,071  $ 127,949
Tax rate                                                               18.0%

Net income                   1,679         42,598        (73,071) $ 582,880

Net income per
 weighted-average
 share, basic for
 Class A and Class B
 (3)                 $        0.00  $        0.10  $       (0.17) $    1.37

Net income per
 weighted-average
 share, diluted for
 Class A and Class B
 (4)                 $        0.00  $        0.11  $       (0.17) $    1.34


(1)  For the first half of 2012, no costs were capitalized for the
development of software products. Amortization expense from previously
capitalized amounts was $42.6 million for the first half of 2012.

(2) Non-GAAP financial information for the quarter is adjusted for a tax
rate equal to our annual estimated tax rate on non-GAAP income. This rate is
based on our estimated annual GAAP income tax rate forecast, adjusted to
account for items excluded from GAAP income in calculating the non-GAAP
financial measures presented above. Our estimated tax rate on non-GAAP
income is determined annually and may be adjusted during the year to take
into account events or trends that we believe materially impact the
estimated annual rate including, but not limited to, significant changes
resulting from tax legislation, material changes in the geographic mix of
revenues and expenses and other significant events. Due to the differences
in the tax treatment of items excluded from non-GAAP earnings, as well as
the methodology applied to our estimated annual tax rates as described
above, our estimated tax rate on non-GAAP income may differ from our GAAP
tax rate and from our actual tax liabilities.

(3) Calculated based upon 426,106 basic weighted-average shares for Class A
and Class B.

(4) Calculated based upon 434,014 diluted weighted-average shares for Class
A and Class B.



                                VMware, Inc.

                   RECONCILIATION OF GAAP TO NON-GAAP DATA
                   For the Six Months Ended June 30, 2011
                  (in thousands, except per share amounts)
                                 (unaudited)

                                        Employer
                                        Payroll
                                         Taxes
                                      on Employee               Acquisition
                         Stock-Based     Stock      Intangible    Related
                 GAAP    Compensation Transactions Amortization    Items
               --------  -----------  -----------  -----------  -----------

Operating
 expenses:
Cost of
 license
 revenues      $104,946         (904)         (67)     (20,144)           -
Cost of
 services
 revenues      $197,426      (11,328)        (879)      (2,484)           -
Research and
 development   $358,404      (87,958)      (5,844)      (1,594)           -
Sales and
 marketing     $617,484      (45,787)      (3,307)      (4,515)           -
General and
administrative $146,277      (20,038)        (857)         (72)      (1,382)

Operating
 income        $340,394      166,015       10,954       28,809        1,382
Operating
 margin            19.3%         9.4%         0.6%         1.6%         0.1%

Other income,
 net           $ 56,804

Income before
 income taxes  $402,388      166,015       10,954       28,809        1,382

Income tax
 provision     $ 56,418
Tax rate           14.0%

Net income     $345,970      166,015       10,954       28,809        1,382

Net income per
 weighted-
 average
 share, basic
 for Class A
 and Class B
 (4)           $   0.83  $      0.40  $      0.03  $      0.07  $         -

Net income per
 weighted-
 average
 share,
 diluted for
 Class A and
 Class B (5)   $   0.80  $      0.39  $      0.03  $      0.07  $         -


table continued below


                              Stock-Based
                             Compensation
                Capitalized   Included in    Gain on                 Non-
                 Software     Capitalized    sale of      Tax        GAAP,
                Development    Software     Terremark  Adjustment     as
                 Costs (1)    Development      (2)         (3)     adjusted
               ------------  ------------  ----------  ----------  --------

Operating
 expenses:
Cost of
 license
 revenues           (48,272)            -           -           -  $ 35,559
Cost of
 services
 revenues                 -             -           -           -  $182,735
Research and
 development         61,898        (9,039)          -           -  $315,867
Sales and
 marketing                -             -           -           -  $563,875
General and
 administrative           -             -           -           -  $123,928

Operating
 income             (13,626)        9,039           -           -  $542,967
Operating
 margin                -0.7%          0.5%          -           -      30.8%

Other income,
 net                                          (56,000)             $    804

Income before
 income taxes       (13,626)        9,039     (56,000)          -  $548,961

Income tax
 provision                                                 53,374  $109,792
Tax rate                                                               20.0%

Net income          (13,626)        9,039     (56,000)    (53,374) $439,169

Net income per
 weighted-
 average
 share, basic
 for Class A
 and Class B
 (4)           $      (0.03) $       0.01  $    (0.13) $    (0.13) $   1.05

Net income per
 weighted-
 average
 share,
 diluted for
 Class A and
 Class B (5)   $      (0.03) $       0.01  $    (0.13) $    (0.12) $   1.02


(1)  For the first half of 2011, we capitalized $61.9 million (including
$9.0 million of stock-based compensation) of costs incurred for the
development of software products. Amortization expense from capitalized
amounts was $48.3 million for the first half of 2011.

(2) VMware realized a gain of $56.0 million on the sale of its investment in
Terremark Worldwide, Inc.

(3) Non-GAAP financial information for the quarter is adjusted for a tax
rate equal to our annual estimated tax rate on non-GAAP income. This rate is
based on our estimated annual GAAP income tax rate forecast, adjusted to
account for items excluded from GAAP income in calculating the non-GAAP
financial measures presented above. Our estimated tax rate on non-GAAP
income is determined annually and may be re-calculated during the year to
take into account events or trends that we believe materially impact the
estimated annual rate including, but not limited to, significant changes
resulting from tax legislation, tax audit closures, material changes in the
geographic mix of revenues and expenses and other significant events. Due to
the differences in the tax treatment of items excluded from non-GAAP
earnings, as well as the methodology applied to our estimated annual tax
rates as described above, our estimated tax rate on non-GAAP income may
differ from our GAAP tax rate and from our actual tax liabilities.

(4) Calculated based upon 418,557 basic weighted-average shares for Class A
and Class B.

(5) Calculated based upon 429,984 diluted weighted-average shares for Class
A and Class B.



                                VMware, Inc.

                              REVENUE BY TYPE
                               (in thousands)
                                (unaudited)

                     For the Three Months Ended   For the Six Months Ended
                              June 30,                    June 30,
                     --------------------------  --------------------------
                         2012          2011          2012          2011
                     ------------  ------------  ------------  ------------

Revenues:
  License            $    517,222  $    464,806  $    999,149  $    883,805
  Services:
    Software
     maintenance          519,119       386,329     1,011,389       750,135
    Professional
     services              86,685        70,075       167,670       130,991
                     ------------  ------------  ------------  ------------
  Total services          605,804       456,404     1,179,059       881,126
                     ------------  ------------  ------------  ------------
Total revenues       $  1,123,026  $    921,210  $  2,178,208  $  1,764,931
                     ============  ============  ============  ============


Percentage of
 revenues:
  License                    46.1%         50.5%         45.9%         50.1%
  Services:
    Software
     maintenance             46.2%         41.9%         46.4%         42.5%
    Professional
     services                 7.7%          7.6%          7.7%          7.4%
                     ------------  ------------  ------------  ------------
  Total services             53.9%         49.5%         54.1%         49.9%
                     ------------  ------------  ------------  ------------
Total revenues              100.0%        100.0%        100.0%        100.0%
                     ============  ============  ============  ============



                                VMware, Inc.

        RECONCILIATION OF GAAP CASH FLOWS FROM OPERATING ACTIVITIES
                             TO FREE CASH FLOWS
                       (A NON-GAAP FINANCIAL MEASURE)
                               (in thousands)
                                (unaudited)

                                                 For the Three Months Ended
                                                          June 30,
                                                 --------------------------
                                                     2012          2011
                                                 ------------  ------------

GAAP cash flows from operating activities        $    391,325  $    462,796
Capitalized software development costs                      -       (25,437)
Excess tax benefits from stock-based
 compensation                                          32,701       101,256
Capital expenditures                                  (44,336)      (95,186)
                                                 ------------  ------------
Free cash flows                                  $    379,690  $    443,429
                                                 ============  ============



                                VMware, Inc.

        RECONCILIATION OF GAAP CASH FLOWS FROM OPERATING ACTIVITIES
                             TO FREE CASH FLOWS
                       (A NON-GAAP FINANCIAL MEASURE)
                               (in thousands)
                                (unaudited)

                                             For the Trailing Twelve Months
                                                     Ended June 30,
                                             ------------------------------
                                                  2012            2011
                                             --------------  --------------

GAAP cash flows from operating activities    $    2,052,849  $    1,544,027
Capitalized software development costs              (21,139)        (75,837)
Excess tax benefits from stock-based
 compensation                                       159,622         286,220
Capital expenditures                               (185,866)       (193,819)
                                             --------------  --------------
Free cash flows                              $    2,005,466  $    1,560,591
                                             ==============  ==============

About Non-GAAP Financial Measures

To provide investors and others with additional information regarding VMware's results, we have disclosed in this press release the following non-GAAP financial measures: non-GAAP operating income, non-GAAP net income, non-GAAP income per diluted share, non-GAAP operating margin, free cash flows and trailing twelve-month free cash flows. VMware has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. These non-GAAP financial measures, other than free cash flows, differ from GAAP in that they exclude stock-based compensation, employer payroll tax on employee stock transactions, amortization of intangible assets, acquisition related items and the net effect of the amortization and capitalization of software development costs. Free cash flows differ from GAAP cash flows from operating activities in its treatment of capitalized software development costs, excess tax benefits from stock-based compensation and capital expenditures.

VMware's management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, to calculate bonus payments and to evaluate VMware's financial performance, the performance of its individual functional groups and the ability of operations to generate cash. Management believes these non-GAAP financial measures reflect VMware's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in VMware's business, as they exclude expenses and gains that are not reflective of ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating VMware's operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. Additionally, management believes information regarding free cash flows provides investors and others with an important perspective on the cash available to make strategic acquisitions and investments, to repurchase shares, to fund ongoing operations and to fund other capital expenditures.

Management believes these non-GAAP financial measures are useful to investors and others in assessing VMware's operating performance due to the following factors:

• Stock-based compensation. Although stock-based compensation is an important aspect of the compensation of VMware's employees and executives, determining the fair value of certain of the stock-based instruments we utilize involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock options, which is an element of our ongoing stock-based compensation expense, is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies.
  
  
• Excess tax benefits from stock-based compensation. We account for stock-based compensation under GAAP, which requires that we report the excess income tax benefit from stock-based compensation as a financing cash flow rather than as an operating cash flow. We have added this benefit back to our calculation of free cash flows in order to generally classify cash flows arising from income taxes as operating cash flows.
  
  
• Employer payroll tax on employee stock transactions. The amount of employer payroll taxes on stock-based compensation is dependent on VMware's stock price and other factors that are beyond our control and do not correlate to the operation of the business.
  
  
• Amortization of intangible assets. A portion of the purchase price of VMware's acquisitions is generally allocated to intangible assets, such as intellectual property, and is subject to amortization. However, VMware does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition's purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition. Therefore, VMware believes that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods.
  
  
• Acquisition related items. Acquisition related items include direct costs of acquisitions, such as transaction fees, which vary significantly and are unique to each acquisition. Additionally, VMware does not acquire businesses on a predictable cycle.
  
  
• Capitalized software development costs. Capitalized software development costs encompasses capitalization of development costs and the subsequent amortization of the capitalized costs over the useful life of the product. Amortization and capitalization of software development costs can vary significantly depending upon the timing of products reaching technological feasibility and being made generally available. In addition, we exclude the capitalization of software from our free cash flows to better convey management's view of operating cash flows. To the extent that we capitalize costs under generally accepted accounting guidance, we increase our GAAP operating cash flows due to the treatment of capitalized costs as cash used in investing activities. Historically, the amount of software development costs that we capitalized during a given fiscal period was often significant. However, following the release of VMware vSphere 5 and the comprehensive suite of cloud infrastructure technologies in the third quarter of 2011, management determined that VMware's go-to-market strategy had changed from single solutions to product suite solutions. As a result of this change in strategy, and the related increased importance of interoperability between our products, the length of time between achieving technological feasibility and general release to customers has significantly decreased. Given that we expect the majority of our product offerings to be suites or to have key components that interoperate with our other product offerings, the costs incurred subsequent to achievement of technological feasibility are expected to be immaterial in future periods and we do not expect to record significant capitalized software development costs under our current strategy. We did not record capitalized software development costs during the first half of 2012. We also expect amortization of previously capitalized software development costs to steadily decline as previously capitalized software development costs become fully amortized.
  
  
• Tax Adjustment. Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating our non-GAAP income. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenues and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.
  
  

Additionally, we believe that the non-GAAP financial measure, free cash flows, is meaningful to investors because we review cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations. As discussed above, we also exclude capitalization of software development costs and the excess income tax benefit from stock-based compensation from our measure of free cash flows.

The use of non-GAAP financial measures has certain limitations because they do not reflect all items of income and expense that affect VMware's operations. Specifically, in the case of stock-based compensation, if VMware did not pay out a portion of its compensation in the form of stock-based compensation and related employer payroll taxes, the cash salary expense included in costs of revenues and operating expenses would be higher, which would affect VMware's cash position. VMware compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP and should not be considered measures of VMware's liquidity. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages investors and others to review VMware's financial information in its entirety and not rely on a single financial measure.

Revenue Growth in Constant Currency

We invoice and collect in the Euro, the British Pound, the Japanese Yen, and the Australian Dollar in their respective regions. As a result, our total revenues are affected by changes in the U.S. Dollar against these currencies.

In order to provide a comparable framework for assessing how our business performed excluding the effect of foreign currency fluctuations, management analyzes year-over-year revenue growth on a constant currency basis. Since all of our entities operate with the U.S. Dollar as their functional currency, unearned revenues for orders booked in currencies other than U.S. Dollars are converted into U.S. Dollars at the exchange rate in effect for the month in which each order is booked. We calculate constant currency on license revenues recognized during the current period that were originally booked in currencies other than U.S. Dollars by comparing the exchange rates used to recognize revenue in the current period against the exchange rates used to recognize revenue in the comparable period. We do not calculate constant currency on services revenues, which include software maintenance revenues and professional services revenues.