The second-quarter results would have been impressive for any company with lower expectations, but 54% annual revenue growth and 30% higher EPS failed to impress Mr. Market when it came from this virtual computing specialist. The stock was already trading at the lowest levels in the company's young market history, and then dropped another 10% overnight.
Perhaps the biggest reason why VMware needed to deliver the goods this time is that mighty Microsoft
Fresh CEO Paul Maritz spent a few minutes of the conference call explaining how VMware's diverse product portfolio sets it apart from one-trick ponies like Microsoft or Citrix Systems
With the Microsoft solution, you can set up a powerful and flexible machine structure. With VMware, you can do the same thing, then manage a slew of them from a central dashboard, migrate machines on the fly (great for disaster recovery scenarios), and much more. It will take years for Redmond to catch up to this massive feature lead, and by then Maritz hopes to be "one of the strategic IT and software vendors" of the world. Goodbye, small though exciting niche -- hello, the likes of IBM
It's a bold vision, and recent share price movements do not inspire confidence. Look beyond chart squiggles and into the actual business opportunities, and the picture changes dramatically.