(Reuters) - Cloud computing software maker VMware Inc forecast current-quarter revenue that fell short of analysts’ estimates, sending its shares down 7 percent in extended trading.
VMware, controlled by data storage equipment maker EMC Corp, said it expects revenue in the range of $1.21 billion to $1.24 billion for the second quarter.
Analysts on average were expecting revenue of $1.25 billion, according to Thomson Reuters I/B/E/S.
VMware announced a joint venture with EMC in March, dubbed Pivotal Inc, that would include VMware’s Cloud Foundry application service, as well as EMC’s Greenplum data analytics software and other products.
Pivotal started operations from April 1.
All revenue and costs associated with VMware’s contribution to Pivotal will be eliminated from VMware’s financial statements from the second quarter and about $70 million in unearned revenue will be transferred to Pivotal in the quarter, Chief Financial Officer Jonathan Chadwick said on an analyst call.
VMware reaffirmed the full-year outlook that it disclosed in an investor meeting last month but did not announce more widely.
At that meeting, VMware said it had lowered its full-year revenue outlook to $5.12-$5.24 billion from $5.23-$5.35 billion to account for the transfer of revenue to Pivotal.
Analysts were expecting revenue of $5.21 billion, but it was not clear if all had taken the revenue shift into consideration.
“They kept the full-year number and guided to a number which is below the Street for Q2, which basically means that they expect more business in the second half than they expect in Q2,” said analyst Rajesh Ghai of Craig-Hallum Capital Group.
VMware said net income fell to $173.6 million, or 40 cents per share, in the first quarter ended March 31, from $191.4 million, or 44 cents per share, a year earlier.
Excluding items, the company earned 74 cents per share. Revenue rose 13 percent to $1.19 billion.
Analysts on average had expected a profit of 70 cents per share on revenue of $1.18 billion.
VMware shares were down 7 percent at $70.65 in after-hours trading. The company’s stock closed up 3 percent at $75.70 in regular trading on the Nasdaq on Tuesday.
Reporting by Supantha Mukherjee and Aditya Kondalamahanty in Bangalore; Editing by Maju Samuel