VMware Comes Down to Earth
There are, to be sure, at least a couple of good reasons why virtualization
pioneer VMware
lost
about a third of the value of its stock price on Tuesday following its Monday
afternoon fourth quarter earnings report.
First of all, VMware's quarterly revenue number and its projections of revenue
growth for 2008 both missed analysts' estimates. And, even though everything
else for Q4 and 2007 actually looked
pretty good, those two numbers coming up short was enough to scare off investors.
Beyond that, with a recession possibly looming -- and maybe even already upon
us -- it doesn't take much to spook investors these days. Just ask Apple and
Google. So, despite the fact that VMware continues to rake in the dough, its
stock price is taking a hit.
Here at RCPU, we get all that, and we don't want to jump to conclusions. But,
we do sometimes speculate a bit, and we wonder whether maybe, just maybe, Microsoft's
concretization of its
own virtualization strategy might have played in the backs of investors'
minds this week. Oh, sure, Redmond has a long way to go to catch VMware technology-wise,
and VMware itself is no sputtering start up -- it's 10 years old, majority owned
by tech titan EMC and, stock-price catastrophe aside, still very, very profitable.
Still, we all know that unless it's consumer search or personal music players
-- neither of which represents an enterprise-focused market -- Microsoft, when
it gets good and ready, tends to make room for itself in new markets at the
expense of incumbents. Obviously, that's not happening in virtualization...yet.
It's the "yet," though, that intrigues us and might have given investors
pause, as well, this week.
Or maybe not. In the current parlance of America's youth, we're not sayin'
anything...we're just sayin'.
What's your take on VMware's stock-price tank? Let 'er rip at lpender@rcpmag.com.
Posted by Lee Pender on January 30, 2008 at 11:54 AM