Is the growth-darling honeymoon over for virtual computing pioneer VMware
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
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
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
Am I wrong? Does VMware still deserve an insane growth premium? Let me know what you think in the comments below.