Please no bashers...
I had way too many eggs in this basket. And have lost a lot like many of you. Do you think it will go "up" or "down" tomorrow (should I sell in after hours)? I'm willing to cut my losses, but I don't want to make a dumb mistake.
Please offer words of wisdom, cause apparently I know a lot less than I thougt
If we calculate the PE using forward EPS, it's actually quite reasonable. Still high compared to the rest of the industry, but certainly not a total risk like at 166. My guess is that over the next few days, it can still drop to mid 50's. But by year end, it will fluctuate to $80-90.
For the time being though, it'll probably hover between $55-65 for 6-8 months.
With a reasonable PE, I just don't foresee the bottom completely dropping out on us again for the next 24 months, and growth, has a chance to remain high. After a while, there will be an upgrade cycle, and the technology is ripe for more VM's. Imagine 8+ cores per processor with a few hundred Gigs of RAM. I mean, what else would you use multi-cores for? What are you going to do with all of that resource? You'll probably find a way to consolidate hardware and offer up development environments to more teams. With better management tools, IT will start defining ways to partition their current processes and allow development to happen instead of red-taping everything.
This VM industry is still young.
But if you're asking if it can drop? Yes, it can drop.
Yes, GOOG and AAPL are two names I own in my LEAPS folio. I have Jamba Juice too :)
I am more confident about AAPL than GOOG though. As AAPL is very cheap (10x EV and 13x P/E) I own more AAPL than GOOG.
But least you want to do now is sell your VMW holdings before it sinks tomorrow to under $50-45.
Just hold it, and see what happens. Remember you haven't lost ANY money yet. So imagine a year from now if it is back in the 70's or 80's (depending on where you bought it)...would it be worth hold till then? My wife bought some MCK 8 years ago, which was then hit by a scandal. But is it now above where she bought it; while she hasn't made a ton, she didn't LOSE any either.
Everyone has to make their own decisions. Have a drink, don't panic. You may just have to stop looking at the price for 3 months....
Not much you can do. However, the P/E even after this haircut is very high....It's up to you but you may want to sell and move on.
If your in the market this type of pain happens to everyone
sooner or later. Sorry, I know how it feels (like SHIT)!
You will get replies up and replies down. If you can hold for weeks or months it will go back up by next quarter. Maybe not all the way but definitely up some. I lost too but on paper. If you are on margin then i am sooo sorry. You could also sell and try something not as volatile. We all feel bad. But VMW CC was really quite positive. Did you listen to it?
When you buy stocks like this that have inflated PE's you are opening yourself up to huge drops if they don't live up to the hype. Competition is pouring into this field with the big boys who have deep pockets. And yes it is going to fall bigtime at the open. I would hold on and wait for a small move up in the market when Fed cuts rates an expected 50 basis points. Then dump it.
More often the first drop is followed by another but also sometimes you get a bounce to retrace some of the losses the very next day.
I see it hard for VMW to keep up a 50% growth rate year on year to justify lofty PE ratings. Seems to me like the bubble has burst.
Sorry - can't help you directly. No one really knows what will happen tomorrow. This is the risk we take. Stop losses don't protect you against a drop like this but at least you can now decide if VMW is worth a risk at this price or you sell and move on.
"More often the first drop is followed by another but also sometimes you get a bounce to retrace some of the losses the very next day"
"I see it hard for VMW to keep up a 50% growth rate year on year "
I think it's possible as the industry will grow to 10 bil by 2010 and MSFT is not really a threat since they will always be 1-2yrs behind and their stuff will only support Windows
"No one really knows what will happen tomorrow"
TRUE again, in fact you might even get 1 or 2 upgrades based on the conf call