WMware's Earnings Will Show Mobile And Big Data Momentum

VMware, the leading desktop virtualization company, is set to announce its Q2 revenues on July 23. Earnings in Q1 grew 25% to $1.06 billion on a yearly basis however was down by about half a percent on a quarterly basis as Q1 has traditionally been a slow quarter for VMware. Management had raised its outlook for 2012 expecting virtualization and cloud computing to drive growth. We expect mobile desktop virtualization, bring-your-own-device, Big Data analytics and enterprise social networking will be the main revenue drivers for Q2 and the subsequent quarters.

Enterprise networks are of two types: The Intranet, or an internal social network for use by employees, and an enterprise network for customer service, which doubles up as a platform for companies to engage clients via social networks. The social Intranet is used for collaboration on projects and leading in this space is Salesforce.com with its Chatter service.

Virtualization company

VMware is primarily a virtualization company and this division accounts for 90% of its current Trefis price estimate. It is looking to move into the enterprise social networking space with its latest offering, Socialcast. Although this division does not contribute significantly to the company earnings currently, it is a big possibility for VMware.

If Jive, which reported an annual revenue of ~$80 million in 2011 is used as a benchmark, enterprise social network can become a major source of revenue for VMware going forward, as it can leverage its institutional client network to cross sell Socialcast. The company is as well moving into mobile phone virtualization and can provide a mobile social network easily.