PALO ALTO, Calif. (AP) -- VMware Inc.'s fourth-quarter profit rose 63 percent but the cloud computing company's shares fell in extended trading Tuesday after it warned that a planned acquisition may hurt its profitability.
The Palo Alto, Calif., company announced the $1.18 billion purchase of mobile computing company AirWatch last week. It's expected to close by the end of March.
On a conference call with investors Tuesday, VMware leaders said that they expect a measure of profitability — the adjusted operating margin — to decline in the second quarter from the first quarter, then improve in the second half of the year.
VMware shares slipped $1.48, or 1.6 percent, to $93.46 in extended trading.
For the fourth quarter, net income increased 63 percent to $335 million, or 77 cents per share, from $206 million, or 47 cents per share, in the October-December period in 2012. On an adjusted basis, earnings rose to $1.01 per share from 81 cents per share. That beat Wall Street's prediction by a penny. Revenue increased 15 percent, to $1.48 billion from $1.29 billion, in line with what analysts polled by FactSet forecast.
VMware still expects first-quarter revenue forecast of $1.33 billion to $1.37 billion, bracketing analysts' prediction of $1.35 billion. It also maintained a revenue forecast of $5.94 billion to $6.1 billion for the year. Analysts see $6 billion.