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VMware, Inc. Message Board

  • equityrich equityrich Jan 29, 2013 12:49 PM Flag

    Why I sold at 90 many months back. Real competition

    I sold my stake in VMware a few months back at 90. The sell was based on valuation in the face of competition.

    I bet most wall street analysts and most investors do not realize the changing landscape. There is major competition that VMware is losing business to and hitting pricing hard.

    A legitimate competitor in Microsoft. Hyper-V is taking some share and giving vmware major headaches in enterprise pricing.

    The low and mid end are being filled by OpenStack, VirtualBox and Eucalyptus. If you don't know about these look them up especially if you own shares in VMware.

    Last they have public cloud competition where many companies are moving to such as Amazon AWS and Rackspace. Rackspace will even manage your own private/public cloud if you want using the open source OpenStack.

    I sold as one who is in IT and can see the landscape well before a wall street analyst who never managed a server in his life.

    Tougher days lie ahead for vmware. Margin and share erosion is on the menu as well as revenue. If you own the stock look up these competitors. They are backed by industry heavyweights with deep pockets and they are coming for VMware. They have nothing to lose and only something to gain so they can compete on price. Some of these are approaching the management and functionality you need for almost any deployment you might want.

    VMware won't go out of business but capitalism will ensure it is not as lucrative as it was when they were the only show in town.

    Little anecdote. I had over 25 servers at rackspace. Looked at consolidating them to just 3 or 4. With VMware's licensing costs it would cost me more to do this than to just keep the actual 25 physical servers! Needless to say we never went VMware and kept all the raw iron in the datacenter.

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    • Thanks for your info. equityrich. People on this thread will no doubt be po'd at you for telling a negative story because they are 'in love' with the company. I do not 'do that', I've been trading a long time and swear no allegiance to a stock. My take is based on about a 5 year weekly chart of VMW and I see some bad things which I will post from another post I just made today, and thanks again for your take:
      There has not been a weekly fall like the one we just witnessed since 2008. As for the last 3 years, there's the 1st high in July 2011, then a higher high in April 2012, BUT, the MACD does NOT exceed the July 2011 high and now a breaking down 3rd peak that is almost surely the beginning of a major year over year decline. I'm not even going to go long this stock for quick trades. From here on in I'm just shorting if I see any strength at all.

      • 1 Reply to sport_of_kings_rich_kings
      • Excellent observation. Also good advice never falling in love with a stock. I just dumped Apple after holding it for about 4 years. Average price under 200. Growth for 2013 now at 0%. Time to sell and redeploy cash and profits into better companies. Way too many people fell in love with this and want to hold on "hoping" for 600 or 700's. While possible you can probably get the percentage gain faster with the index going forward. Same with VMware. Love the technology as an IT guy but the reality is they are feeling the heat from the cloud as well as competition in the low and mid tier.

        There are easier places to make money in the market.

        I have one play that is pretty safe and very long term in nature. It might take 2 to 10 years to really get moving and depends a bit on global oil prices. Utilities will soon replace gas stations as plug in hybrids and pure EV's proliferate. More mfg's putting out great cars at better prices with many more coming. In a few years people will be filling up off the grid more and more. Huge tailwind for utilities like Duke Energy and Southern Company (I own both). Increased electric demand will be significant here. Won't go into it much more but keep an eye on this. If you buy now they pay you 5% to wait...

        Good luck VMware longs. I'll be keeping an eye on the company and the space to see if things change but right now there is some rough sledding ahead for this one.

    • I am in IT as well, VMWare has the biggest pie and will for awhile as they are constantly releasing new products for virtualization to intergrate with SAN and other things. Most big companies are using vmware period from what I seen by a large percentage. As there are a small percentage of customers that are using Amazon AWS and Rackspace like web hosting providers but big companies are not using this for their critical and financial information especially if it requires regulation aka SOX / Hippa / PCI and some of those others .

    • "The low and mid end are being filled by OpenStack, VirtualBox and Eucalyptus."

      LOL! You act as if these solutions are not complex. I DARE YOU to deploy a full OpenStack infrastructure. It's not easy. Its probably the most complicated install you have ever seen. Not to mention the fact that if you have a serious error with the product you are basically on your own, or have to rely on the open source community to resolve your problem. As for VirtualBox and Eucalyptus, do you have ANY idea how insecure these products are? They are FREE for a reason. The source code for each is out there are can me vetted and manipulated easily. If you had come on this board and provided Hyper-V or Citrix on the EUC side, I would have agreed. They will take some market share. But only a share of the hypervisor. VMWare has had a hypervisor since 2002 (everyone is just now GA'ing theirs). Big deal. Everyone has free hypervisors now. The game has changed its about building cloud infrastructures for the enterprise. VMware is, again, ahead of the game in that space. THAT is where VMWare is going to make their money because they are the best in the world at it. I always choose best of breed in my investments. It just makes sense....

      Sentiment: Buy

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