VMware profits up 28 percent on strong services business

Virtualization company VMware reported a 32 percent increase in revenue for the third quarter and 28 percent in profit on strong sales of services on Tuesday. The news pushed the company's stock price up 23 percent in after-hours trade.

Meanwhile, VMware said it was maintaining its revenue guidance for annual growth of 42 percent to 45 percent , but cautioned that 2008 revenue would likely be at the lower end of the guidance range.

VMware posted third-quarter revenue of $472 million, up from $357.8 million a year ago. Net income rose to $83 million, or 21 cents a share, from $65 million, or 18 cents a share.

Excluding stock options and other items, income would have been $93 million, or 24 cents a share, compared to $85 million, or 23 cents a share, a year earlier.

The results beat Wall Street expectations of $464.6 million in revenue and earnings per share of 20 cents.

"VMware had another solid quarter, despite the challenging economic environment," Chief Executive Paul Maritz said in a statement.

The stock reached $23.20 a share following the announcement, after closing at $18.73 a share.