Cloud Talk: VMWare (VMW) Good - Riverbed Technology (RVBD) Bad

Two key names in the 'cloud' space (VMWare more than Riverbed which is more of a networking stocks) reported this afternoon.  VMWare (VMW) has pleased the Street on first glance, while Riverbed Tech (RVBD) has been taken behind the barn to be shot.

First VMWare, up about 10% as I type this in aftermarket.  Expectations were for $873M in revenue and 47 cents of EPS.  VMW came in at $921M and 55 cents ex items (51 cents with items).  There was also a guide up in Q3 to $915-940M versus expectations of $899M.  Earnings report here.

• U.S. revenues for the second quarter of 2011 grew 35% to $450 million from the second quarter of 2010. International revenues grew 38% to $471 million from the second quarter of 2010.
• License revenues for the second quarter of 2011 were $465 million, an increase of 44% from the second quarter of 2010 as reported, and an increase of 40% measured in constant currency. Service revenues, which include software maintenance and professional services, were $456 million for the second quarter of 2011, an increase of 30% from the second quarter of 2010.

Riverbed Technology is down over 17% 20% as I type.  Expectations were for $173M in revenue and 21 cents of EPS.  RVBD missed by $3M in revenue while coming in line on EPS.  A harsh reaction in my eyes especially in light of record gross (non GAAP) and operating margins.... but any stock with momo investors in it must continue almost always continue to show outsized results vs expectations or get punished.   Earnings report here.

• Riverbed Technology today reported financial results for its second quarter ended June 30, 2011 (Q2'11). Revenue for Q2'11 was $170.3 million, up 35% compared to the second quarter of fiscal year 2010 (Q2'10).
• Reporting on a GAAP basis, net income for Q2'11 was $11.3 million, or $0.07 per share. This compares to GAAP net income of $6.6 million, or $0.04 per diluted share, in Q2'10. Non-GAAP net income for Q2'11 was $34.9 million, or $0.21 per diluted share, as compared to non-GAAP net income for Q2'10 of $19.2 million, or $0.13 per share. 
• Non-GAAP product gross margin reached an all-time high of 81.5%, and we achieved a record non-GAAP operating margin of 29.6%. 
• “We experienced softness in the EMEA region, which we attribute to both the regional economy and our own execution. Looking ahead, we have confidence in our ability to improve our execution in this region with new EMEA sales leadership announced last week.

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