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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
TheStreet) -- The new buzzword of all buzzwords these days is "cloud computing." While not entirely a new concept, there are many companies racing and jockeying to be the first to either define or "re-define" what it means.
As you can imagine, it gets a bit complicated. It is broadly understood that "the cloud" means "the Internet." Think about it, when have you ever seen a network diagram demonstrating a route to the Internet that does not include a cloud clipart? It seems simple enough except when you couple it with the term "computing" -- an entirely new standard for activity that helps corporations deliver the level of services whether to their customers are internally within the enterprise.
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From that standpoint, there aren't many companies that do it as well as virtualization king
VMware(VMW - Get Report), much less better.
As noted, the race for that tight space is pretty intense -- imagine a Nascar track where the cars are four-wide and bumper to bumper with one lap to go and no time to pit. In addition to VMware, the race includes names such as
EMC(EMC) and of course
These are just a few of the
software players in this space. We have not even mentioned search giant
Google(GOOG) and hardware players like
Hewlett-Packard(HPQ). As an investor, the challenge is trying to figure out which companies stand to benefit more than others by producing solid market-beating performances.
At the top of my short list is VMware. The company helped affirm my analysis as it reported first-quarter earnings that topped analyst estimates, yet again.
The Quarter That Was
the company reported Q1 earnings and revenue that beat analyst expectations due to improvements in demand for cloud services. The company reported an increase in revenue of 25% as well as a 15% increase in license revenue from the same period of a year ago. What I thought was remarkable was that not only did its operating margin for the quarter arrived over 32% on a non-GAAP basis, but the company also logged an impressive 53% increase in trailing free cash flow -- one that registered at $2.1 billion.