Yesterday's wild ride was certainly rough on the stomach (being a long holder of the stock).
The anticipation of VMworld starting, the embedded ESX 3i hypervisor with major hardware vendors (announced Monday), and the acquisition of Dunes Technology may have been major catalysts for the morning rise. From there we had a bunch of profit taking and short selling to drive the price downward.
VMware announced that it will be offering its Open Virtual Machine Tools to the open source community via http://open-vm-tools.sourceforge.net. The price continued to slope downward at this announcement.
News signaling that Wall Street estimates for the stock were in the $60 - $75 range sent the stock down quickly during lunch time. My news system sent this over to me 40 minutes after the event. I guess I need a more real time news system.
If we look at the daily chart for the past month with a candlestick chart view, we see that the volume rising on September 6, 7, and 10 driving the price upward. The rise and fall on the 11th was very strong volume (10M) which was last seen on August 22nd (a day closed downward too).
In my opinion, the pullback yesterday was a pullback from three upward days and the scare that the Wall Street price estimates of $60 - $75. However, since the news was out early afternoon and the correction didn't drop below $75 I believe this was shaking out the unsure investors.
Peeking into my magic crystal ball (pre-market data) the stock should start higher today.
The analysts consensus is around $0.65 EPS for 2007. If we assume $78 market price that brings the P/E ratio to 120. The estimates for 2008 are around $0.93 EPS. Again, at $78 market price that would be a P/E ratio of 82.
Ever hear, "Trade what you know?" A lot of technology people know what VMware can do for business. It's not as well-known as Google because the average consumer doesn't use it. As more and more coverage occurs though and investors learn about VMware's products then I think we will continue to see stronger upward movements in the stock.