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Zecco.com » Top ZeccoShare Holdings » VMware (VMW) » VMW tanks
Last post 01-29-2008, 11:51 AM by kbellul. 6 replies.
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  •  01-28-2008, 6:25 PM 22569

    VMW tanks

    Reply Quote
    I hope nobody was holding VMW into earnings, there's some major pain being delivered in after hours.

    As someone wrote on the Yahoo message board: "Just pretend you have virtual losses" ;)

  •  01-28-2008, 7:42 PM 22572 in reply to 22569

    Re: VMW tanks

    Reply Quote
    Wow. The news initially didn't sound that bad, either:

    "After the closing bell, the company earnings of $78.2
    million, or 21 cents a share, compared to earnings of $31 million, or 9
    cents a share, from the same period last year.



    Excluding charges and
    one-time items, VMware said it would have earned $103 million, or 26
    cents a share, for the recent period.



    By that measure, VMware
    beat the consensus forecasts of analysts surveyed by Thomson Financial,
    who estimated the company would earn 24 cents a share. However, despite
    an 80% rise in sales, VMware's $412 million in revenue fell short of
    analysts' estimates of $417 million."

    http://www.marketwatch.com/

  •  01-28-2008, 8:15 PM 22576 in reply to 22572

    Re: VMW tanks

    Reply Quote
    Ouch. 26% after hours?

    I'm just hoping it's not another one of those earnings disappointments (see Cisco, Intel) that rocks the entire tech industry.
    tonyleachsf, Zecco Associate

  •  01-28-2008, 9:26 PM 22583 in reply to 22569

    Re: VMW tanks

    Reply Quote
    buy on the dips . lol
    Rise of A Star! One Million By 2012!

  •  01-28-2008, 9:32 PM 22585 in reply to 22576

    Re: VMW tanks

    Reply Quote
    The Nasdaq futures were a little easier last time I looked.

  •  01-29-2008, 12:38 AM 22597 in reply to 22572

    Re: VMW tanks

    Reply Quote

    zecco-jon:
    Wow. The news initially didn't sound that bad, either:

    "After the closing bell, the company earnings of $78.2
    million, or 21 cents a share, compared to earnings of $31 million, or 9
    cents a share, from the same period last year.


    Excluding charges and
    one-time items, VMware said it would have earned $103 million, or 26
    cents a share, for the recent period.


    By that measure, VMware
    beat the consensus forecasts of analysts surveyed by Thomson Financial,
    who estimated the company would earn 24 cents a share. However, despite
    an 80% rise in sales, VMware's $412 million in revenue fell short of
    analysts' estimates of $417 million."

    http://www.marketwatch.com/


    Hey Jon,

    I think that a lot of the media is missing the point on this one. Everyone is focusing on the $5 million revenue miss. That's irrelevant, I think. Hell, they beat earnings estimates by 2c. The key here is that they guided towards very reduced growth for next year. Obviously 100% year-over-year growth is not sustainable, but it's what's required if you expect to trade at 166x trailing earnings (which is where they closed today)

    If you read the transcript of the conference call (I read it at Seeking Alpha: http://seekingalpha.com/ ), you'll see that the guidance for 2008 is ok, but not spectacular. In particular: "Revenue for 2008 is expected to grow approximately 15% compared to 2007." Then, in the QA, the analysts were all asking about the rapid decline in growth, and no really good answers were given.

    Basically, the growth just went from phenomenal to "just ok" with no stops in between... which explains the stock's nosedive. IMO, even the after-hours price of $60 is too high. I'd pay $40, max, for this stock.

    Disclosure: No positions in VMW. Long EMC (small position). Work for an EMC competitor.

  •  01-29-2008, 11:51 AM 22627 in reply to 22597

    Re: VMW tanks

    Reply Quote
    kbellul:

    If you read the transcript of the conference call (I read it at Seeking Alpha: http://seekingalpha.com/ ), you'll see that the guidance for 2008 is ok, but not spectacular. In particular: "Revenue for 2008 is expected to grow approximately 15% compared to 2007." Then, in the QA, the analysts were all asking about the rapid decline in growth, and no really good answers were given.


    Correction: This should be 50%, not 15%. The Seeking Alpha transcript originally said 15%, which I can only assume was a transcription error. It now says 50% (with no mention of the original error anywhere... very unprofessional)

    With a forecast of 50% revenue growth, I think that the $55-$60 price tag seems much more reasonable.

    Keith
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