VMware: No Help From VMworld; Jefferies Chops Target

This should be a big week for VMware (VMW), which is holding the annual VMworld conference this week in Las Vegas. But so far, the event is not doing any favors for investors.

VMW shares, in fact, are down sharply today, pressured in part by negative comments from Jefferies analyst Katerine Egbert. This morning, she repeated her Hold rating on the stock and chopped her price target to $30 from $40.

Egbert notes that the company yesterday unveiled three new long-term initiatives:

  • Virtual desktop
  • Virtual cloud
  • Virtual data center operations

“These roughly equate to enabling customers to virtualize their desktop PCs, build a hosted computing infrastructure and construct a fungible, owned compute architecture,” she writes. “These initiatives will take several years to achieve, but the new initiatives provide a framework for product development and growth.”

That all sounds encouraging (if hideously jargony), but she also notes that the company continues to lose developers, with some departing for Oracle (ORCL). Egbert wrote in a research note that she cut her price target today based on “upheaval in management, increasing attention to virtualization from Microsoft (MSFT), the need to evangelize the new initiatives and the need to sharpen execution during very uncertain economic times.”

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