VMware to buy 5 percent of IT services firm Terremark

NEW YORK (Reuters) - Software maker VMware Inc (VMW.N) plans to buy 5 percent of IT services provider Terremark Worldwide Inc (TMRK.O), Terremark said on Tuesday as it issued a revenue outlook below market estimates.

VMware, which sells software that businesses use to boost the efficiency of computer hardware, will purchase 4 million shares in Terremark at $5 per share.

The IT services firm is one of hundreds of companies that sell VMware software, earning fees on hardware sales, consulting and other services. In 2008, more than 75 percent of the software maker's $1.9 billion in revenue came from sales made by such distributors, according to VMware.

Officials with VMware could not be reached to say whether they would give Terremark preferential treatment over other resellers.

VMware resellers range from small, privately held firms to tech giants Dell Inc (DELL.O), Hewlett Packard Co (HPQ.N) and IBM (IBM.N).

Terremark also reported earnings on Tuesday, issuing sales forecasts that missed analysts' projections.

It estimated revenue for its first quarter ending June 30 of $63 million to $66 million, below the average forecast of $70 million, according to Reuters Estimates.

It projected full-year revenue of $290 million to $300 million, below the average forecast of $302 million.

Terremark reported fourth-quarter net income of $3.5 million, 6 cents per share, compared with a year-earlier loss of $8.9 million, or 15 cents a share, beating analysts' average forecast that it would break even on a per-share basis.

Fourth-quarter revenue rose 21 percent to $68.9 million, missing the $74.2 million average forecast of analysts.

Shares in Miami-based Terremark were quoted at $5.05 in after-market trade, up 5 percent from their Nasdaq close of $4.80. VMware shares remained at $29.26.

(Reporting by Jim Finkle in New York and S. John Tilak in Bangalore; Editing by Vinu Pilakkott, Gary Hill)