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VMware, Inc. Message Board

  • adeiflig adeiflig Jan 29, 2008 5:55 PM Flag

    VMW Price Target $ 175/share by Dec 31 2008

    Here is my take on this. Today 50% of the float changed hands, given that EMC owns 86% of it and float is really 40 million shares, todays trades were 21 million.

    The margin people, the Cramer followers, the pumpers, the hype are all gone.

    Who were the buyers today, afterall we had 21 million shares? I guess it probably is the Donald Trump crowd, Cisco, Intel, Bill Gates and company.

    Did VMW miss revenue estimates? The answer is No. Why were revenues under-reported intentionally.


    a) Management wants to lowball since their compensation is on performance.

    b) They can choose to mask their strength to keep competition away, by choosing to put sales into "deferred unearned revenue" section.

    c) They wanted Cramer crowd out and, investors in.

    d) They wanted to tone down hype.

    It was just too funny to see management struggle to try to explain why revenue will only grow 50%. Answers such as:

    1) We do not see any recession effects
    2) No, margins will increase, no pressure from competition
    3) No, our clients do not intend to switch to competition.
    4) Yes our deferred revenue will grow 50% sequentially
    5) Yes we are paid upfront for 2 year contracts
    6) Yes our cash flow will increase 50% sequentially
    7) No, EMC did not tell us to tone down numbers
    8) No, We are not pricing in anything negative
    9) No, We will not provide forcast on our balance sheet
    10) Yes, we hired 4,000 people due to strong demand
    11) Yes, we expanded our channel base by another 4,000
    12) International sales are very strong.
    13) We have a strong pipeline of products in 2008
    14) MSFT product is of no threat, it is similar to our first version which we are giving away for free.
    15) No, we will not sell to desktop computers where MSFT is since there is no money there.

    One analyst said that he was at a complete loss to understand how VMW could see such a dramatic decrease in revenue, even in the worst of circumstances they would report much better numbers than those given to them, why are you doing this????


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