The VMWorld conference starts tomorrow. It could be a volatile week for VMW..
VMware Ready to Spike
By Ivy Lessner
TheStreet.com Staff Reporter
9/7/2007 2:51 PM EDT
URL: thestreet.com
SAN FRANCISCO -- Because VMware (VMW) only has to bat an eyelash at investors for the stock to jump, look for a roller-coaster-like ascent Monday as the annual VMWorld conference hoopla begins.
Shares were up $1.28, or 1.8%, to $71.07 midday. Its first trading day aside, when VMware rose as much as 90% above its offer price of $29, the stock has proved to be volatile in its first month.
It jumped 15% in a single day a week after its August debut, and shares closed up $5.58, or 8.7%, Thursday, giving the ticker a forward P/E of 77.
The company is sure to use the conference, which begins Sept. 11, as a platform for product-line enhancements. But VMware's competitors, such as Microsoft (MSFT) , will also be on hand finding ways to ride the debutante's virtualization train.
Microsoft has some virtualization capability now, but is not expected to ship a key software component until the second half of 2008.
VMware -- a developer of software that enables corporations to make dramatically more efficient use of servers while cutting energy consumption and providing disaster-recovery ability -- went public Aug. 13, in the most ballyhooed IPO since Google's (GOOG) in 2004.
Throngs are expected to turn out for an opening keynote by company CEO Diane Greene and representatives of major VMware partners. Patrick Gelsinger, general manager of Intel's (INTC) Digital Enterprise Group will focus on platform advances in virtualization.
Then Advanced Micro Devices (AMD) CEO Hector Ruiz will put virtualization into perspective as one of the most influential innovations of the era.
On Sept. 12, Cisco (CSCO) CEO John Chambers will draw the link between virtualization and Web trends.
Intel and Cisco recently took stakes in the virtualization leader ranging from 1.6% to 2.5% of the company.
On a 46% top-line growth curve, the company is expected to bring in close to $1.3 billion this year, and $1.9 billion in 2008, according to Thomson Financial.
With VMW's underwriters barred from providing estimates on the stock for a period following the public offering, half a dozen sell-side analysts have come up with an earnings estimate, excluding items, of 62 cents a share for fiscal 2007, and 91 cents for 2008.
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