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Technology Stocks : VMware, Inc. (VMW)

VMW 142.48

0.0%

Nov 22 4:00 PM EST

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From: Glenn Petersen	4/22/2008 8:56:55 AM
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What to expect from VMW after the close: Earnings Preview: VMware to post 1Q amid competitive worries The Associated Press April 21, 2008, 1:38PM ET NEW YORK Software company VMware Inc. reports earnings for the fiscal first quarter Tuesday. The following is a summary of key developments and analyst opinion related to the period. OVERVIEW: Following the dizzying ascent of its stock price following VMware's initial public offering in August, the shares crashed down to earth after the virtualization software maker reported lower-than-expected fourth-quarter earnings. VMware's offering was the biggest technology IPO since Google went public in 2004. Investors showed particular concern about revenue from VMware's license agreements, which appeared to decline as the economy slowed, according to analysts. Analysts also were unnerved by increasing competition in the virtualization software space. Virtualization software is used to make a single computer operate like several separate machines, often with their own operating systems. The quarter ended with at least two analysts lowering their 2008 outlooks. Deutsche Bank's Todd Raker cited an "increasingly competitive environment." BY THE NUMBERS: Analysts polled by Thomson Financial expect profit of 22 cents per share on sales of $422.4 million. ANALYST TAKE: Lehman Brothers analyst Israel Hernandez expects VMware will match Wall Street profit estimates, but believes sales will come in slightly lower at $420 million. Hernandez wrote in an analyst note that VMware had "a degree of weakness" in the quarter. He cited economic uncertainty and early signs of competition. WHAT'S AHEAD: Lehman Brothers' Hernandez said he expects slow sales this year. and does not expect the company to raise its full year outlook. "We...would not be surprised if expectations were brought down a few percentage points," he wrote. STOCK PERFORMANCE: Shares fell 50 percent during the quarter, from an open of $85.49 to a close of $42.82. They have recovered a bit since then, finishing Friday's trading at $58.47. businessweek.com

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