John Paczkowski

Recent Posts by John Paczkowski

VMW Agonistes

vmware.jpgYou wouldn’t know it from the company’s share price today, but VMware (NYSE: VMW), maker of virtualization software, reported a 150% increase in fourth-quarter profit and an 80% jump in sales to $412 million yesterday. Sadly, investors–presumably the same ones that slapped Apple around after its “best quarter ever”–took a pessimistic view of such growth (which admittedly fell shy of forecasts) and cut the company’s share price by almost 34%.

The stomach-curdling nosedive eradicated about $10 billion in shareholder wealth and dragged VMware’s parent company EMC into the mud as well. The company, which spun off VMware last summer and remains its largest stakeholder, saw its shares slip 6%, though it just reported a strong quarter itself.

Perhaps VMware, which has been lauded as one of the best tech offerings in recent history, is overvalued after all. The company is facing increased competition from powerful rivals. “If you miss your numbers in just your second quarter after going public, that suggests the stock was overhyped,” Trip Chowdhry, an analyst at Global Equities Research, told Reuters. “The story is not as perfect as investors believe. Oracle and Microsoft and Citrix have spoiled VMware’s party.”

Perhaps. But if it’s not, the sudden decline in VMW could present a nice investment opportunity. “Here’s your buy-in discount,” says the Motley Fool. “Enjoy it while you can. It took 10 weeks for VMware’s stock to go from a 52-week low of $51.50 per share to the high-water mark at $125.25. It can happen again, so don’t get caught flat-footed.”

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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google