Photo Credit: Chris Potter

VMware, Inc. (VMW) Information Technology - Software | Reports October 26, After Market Closes

VMware is scheduled to report third quarter earnings tomorrow, after the market closes. This is the first quarter after partner company EMC was acquired by Dell in September. The new Dell brand now holds about 80% of VMW shares which were previously held by EMC. Shares have barely been impacted by the move and have traded sideways for the past 30 days. This should also have little to no impact on its financial performance. Analyst expectations have been tepid on the heels of the upcoming report.

The Estimize consensus is calling for earnings per share of $1.11 on $1.77 billion in revenue, 1 cent higher than the Street on the bottom line and right in line on the top. Compared to a year earlier that represents an 8% increase in earnings and 5% in sales. Shares historically drop by 1% immediately through the print, only to jump 30 days following a report.

VMware is well positioned to leverage its leading position in the virtualization market to other markets such as data centers, hybrid cloud and mobile devices. These three markets will likely be the fastest growing segments in cloud computing over the next several years. VMware also continues to form strong partnerships with major players such as Google and IBM. A recent partnership with Amazon might be the most important though. The former foes will now be primary private cloud partners, enabling VMware to leverage Amazon’s robust footprint in the cloud market.

A few major concerns still stand in the way of its success, including stiff competition, soft IT spending and macroeconomic uncertainty in some of its key markets. Additionally, a subpar report from key competitor Citrix last week might be an indication of weakness in the virtualization market.