As the IT industry falls apart around it, virtualisation software provider VMware is significantly increasing its profitability.

Net income for the first quarter of its financial year was $69.9 million, up 62% from $43.1 million in last year’s first quarter.

Revenues, meanwhile, grew a modest (but in this context, impressive) 7% year-on-year to $470.3 million.

However, there were ill portents in the numbers. Licence revenues for the quarter fell by 13% to $257 million, although. This was compensated for by a 48% rise in services revenue, up to $213.3 million.

The company predicted that revenues will either remain the same or shrink in the second quarter of the financial year.

“Due to the tough economic conditions, we expect customers will continue to keep a very tight rein on their IT spending, particularly new investments,” said VMware CFO Mark Peek. “Also during this quarter, we and our extensive ecosystem of partners will begin the transition to VMware vSphere4.”