(Reuters) - VMware Inc, bucking the trend of weak results from other software makers, reported a better-than-expected quarterly adjusted profit, helped by demand for its software that helps store data more efficiently and cut IT costs.
The company, which activist investor Elliott Management Corp wants separated from parent EMC Corp, makes virtualization software that creates a sort of virtual machine which acts like a real computer within an operating system.
"While bookings were a bit mixed we would call this quarter a victory in light of the recent softness we have seen out of the likes of tech stalwarts such as IBM Corp, SAP SE and Oracle Corp," FBR Capital Markets analyst Daniel Ives told Reuters.
VMware's shares were down 1.5 percent in after-market trade.
Excluding items, VMware earned 87 cents per share in the third quarter ended Sept. 30, above the average analysts' estimate of 83 cents per share, according to Thomson Reuters I/B/E/S.
Total revenue rose 18 percent to $1.52 billion, above the average estimate of $1.50 billion.
License revenue rose 13 percent. Long-term license agreements, including maintenance and support, make up more than 40 percent of VMware's revenue.
RBC Capital Markets analysts said in a pre-earnings note that VMware benefited from federal government spending, and said they expect the company to benefit from more license renewals in the second half of the year than in the first half.
VMware's net income fell 26 percent to $194 million, or 45 cents per share, in the quarter due to the impact of its $1.54 billion acquisition of mobile device management software maker AirWatch earlier this year.
Activist investor Elliott Management has publicly urged data storage products maker EMC - which holds an 80 percent stake in VMware - to sell the unit or pursue other merger opportunities. EMC plans to keep its company together.
VMware stock closed at $88.19 on the New York Stock Exchange on Tuesday.
(Reporting by Soham Chatterjee in Bangalore; Editing by Savio D'Souza)
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