Is VMware's Honeymoon Over Already?

Is the growth-darling honeymoon over for virtual computing pioneer VMware (NYSE: VMW  ) ?

The company just reported a mighty fine fourth quarter with 37% year-over-year sales growth and double the earnings. Both the reported results and forward guidance put analyst consensus firmly in the rearview mirror. And then the stock opened more than 5% lower the next morning. Nice hangover, dude.

These are not weak numbers by any stretch of the imagination. Also, the price drop is a bit too big to be explained away as profit-taking -- though that angle does make some sense in the light of VMware doubling in the last year, and tripling over 24 months.

No, the honeymoon is over. I like VMware for its leading position in the virtualization market, where even mighty Microsoft (Nasdaq: MSFT  ) is playing catch-up. It's harder to like the nosebleed-inducing price-to-earnings ratio at 125 times trailing earnings. That's a huge growth premium on top of the fundamentals, and VMware is getting too big for those breeches. The law of large numbers surely applies.

That said, VMware remains a technology leader and is still growing very swiftly. It also lives up to its Rule Breaker moniker by reporting "a strong budget flush" trend while networking specialist F5 Networks (Nasdaq: FFIV  ) recently complained about a lack of said trend.

Should VMware investors resign themselves to compressed multiples from now on, reflecting a more mature business with slower growth? Much of the low-hanging fruit may have been picked already, making future growth harder to come by. Yes, even if virtualization itself remains the hot ticket of choice -- smaller players Red Hat (NYSE: RHT  ) and Citrix Systems (Nasdaq: CTXS  ) may actually be better positioned to shoplift market share from the established giants to fuel some hypergrowth of their own.

Am I wrong? Does VMware still deserve an insane growth premium? Let me know what you think in the comments below.