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VMware, Inc. Message Board

  • virtualgh0st virtualgh0st Apr 24, 2013 12:02 PM Flag

    they've actually INCREASED the full year revenue guidance


    since they will be excluding the Pivotal revenue for the rest of the year and kept the forecast unchanged.

    this is probably the first time i've seen a company drop 5% after such a move.

    EMC kept the guidance unchanged and the stock is up. That makes sense.

    I know this stock has been manipulated for months, but still, someone needs to step in and put an end to this charade....

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    • Do you understand stocks ghost? VMW has a PE of 44. That means that at the current levels, you are paying a 44x multiple on their earnings. AAPL has a PE of 9, EMC has a PE of 18, to give you some examples. Investors are only willing to pay such a high premium on shares if a company has an enormous perceived future value or growth. Sales are declining YOY for VMW, they are facing competitive pressures from other companies (MSFT Virtualization software is basically free when you own their O/S licensing, which most people do when they have servers to virtualize to begin with). Vmware is also not seeing traction in the VDI space, which was supposed to be the "next big thing" but hasn't turned out the way people had though.

      Long story short, VMW is not the mega growth story it once was, therefore paying a 44x PE premium for their shares is no longer justified. I would put a fair multiple for VMW at 25x, which would put the stock in the 45-50/share range. Like it or not, thats the way the market works. When 70 breaks this week, its going to be really ugly and you will be left holding the bag.

      Sentiment: Strong Sell

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