(Reuters) - Virtualization software maker VMware Inc’s adjusted profit beat the average analyst estimate for the eighth straight quarter due to strong demand for its products that help cut the cost of moving data to the cloud.
The company also doubled its share buyback program to $2 billion, helping to send its stock up nearly 2 percent in extended trade.
VMware, like rival Citrix Systems Inc, makes software that enables the creation of a virtual machine that act like a real computer with an operating system, helping clients use server and storage space more efficiently.
The company, however, forecast lower-than-expected profit and revenue for the current quarter, citing the impact of a stronger dollar and “longer revenue recognition periods” for client deals struck in the fourth quarter.
More than 48 percent of VMware’s revenue comes from outside the United States, according to a regulatory filing in November.
The company’s first-quarter adjusted profit forecast of 83-85 cents per share is well below the average analyst expectation of 89 cents, according to Thomson Reuters I/B/E/S.
VMware’s revenue forecast of $1.49 billion-$1.51 billion also missed the analysts’ average estimate of $1.55 billion.
The Street will look past the conservative forecast, which is mostly currency related, FBR Capital Markets analyst Daniel Ives said.
Total revenue rose 14.8 percent to $1.70 billion in the fourth quarter ended Dec. 31, narrowly beating the average analyst estimate $1.69 billion as income from both licenses and services rose.
Revenue from services rose 16.3 percent to $926 million. Contracts for software maintenance and support made up more than 54 percent of total revenue.
Net income fell to $326 million, or 75 cents per share, from $335 million, or 77 cents per share, a year earlier.
Excluding items, the company earned of $1.08 per share, above the average analyst estimate of $1.06.
VMware’s parent EMC Corp said earlier this month that it had reached a standstill agreement with activist investor Elliott Management Corp, prohibiting the hedge fund from publicly pushing EMC to spin off VMware or pursue other merger opportunities until September.
Paul Singer-controlled Elliott has a 2.2 percent stake in EMC.
VMware stock fell nearly 14 percent in 2014.
Reporting By Sai Sachin R in Bengaluru; Editing by Ted Kerr, Savio D'Souza and Simon Jennings