VMware (VMW)

One of my Fooligan picks from the Rule Breaker menu.

The reason for my thumbs-up now on VMW is the fact that we're seeing the same price range as the first post-IPO buyers back in August '07, after a round trip to 125 and back. Meanwhile the company has been growing nicely for a year and its story, as far as I can tell, is intact. I attribute the big price pullback to the one-two punch of normal dissipation of IPO mass hysteria, and the grim tone of the overall market. Altogether, a happy set of circumstances in terms of the risk-reward picture on the stock. It's certainly at a better valuation now than it was a year ago.

Although I'm not specifically familiar with VMWare's products or with the virtualization concept, I think a rough analogy with Oracle's position in the database world might be appropriate. There always were numerous cheaper alternatives to Oracle's database product, and arguably some with better features. It didn't appear that Oracle had a moat, but it got off to a big head start over competitors through sheer marketing and sales acumen, and parlayed that into unassailable dominance.

The analogy does raise some questions, in that Oracle eventually had to transition into a much broader market of application software in order to keep growing. I don't know if there's a similar follow-on to virtualization software, but given VMW's current growth rate I don't think that will be a concern for quite awhile.

The company has been growing very well, so perhaps the high price would be warranted based on previous performance. It looks to me that they have no moat and other companies are hot on their tail. I don't think the price ($62/share) is warranted given the competition, particularly from Microsoft who is giving away the technology, even though it is not as fully featured.

Given that the technology is aimed at small and medium sized businesses, less expensive software will erode VMWare's share of the small business market. They will also lose market share from medium sized businesses to companies producing software that supports 10 GB ethernet.

For the rest of 2009 this and others will be challenged to make a buck let alone grow; however this is a recession / economic pick as well as a business pick since you will save quite a bit in hardware and power (both air conditoner/server power) also able to use the existing infrastructure won't have to build out data centers while paying for software. only virtual environment I would trust to run production services. as far as the threat from oracle and windows: vsphere (ESX 4) leaves them both in the dust.

Long-term hold on this one since they have plenty of cash, little debt and while they don't necessarily have a moat, they are already established as a front-runner along with Akamai, Google and Amazon in the "Cloud Computing" revolution.

The revolution will not be televised. ok, well it might when Jim Cramer starts freaking out then all his sheep-oops! I mean followers - start buying all this stuff... I just wish I had more money right now.... so many good bargains due to everyone being so paranoid about the North American economy. And being distracted by the oh-so-sexy resource sector.

I'm into SRI (Socially Responsible Investing), not financial whoring, so I am staying away from Military and Oil stocks. they are covered in blood. and possibly fecal matter.

People who think VMW has competition in the virtualization space don't really know this market. VMW's products are enterprise class and no one else in this space can say that. MSFT offering is years behind in technology. If you want to know more read up on Vmotion and try to find a comparable offering from Microsoft. That is just one example and VMware is adding to its lead with new security offerings. This technology is here and it is here now. This will be a huge year for this technology and this stock.

will emerge from emc/booted creator/coding bug drama and kill it. buying opp is now and with this econ, may continue for some time.

more than just hypervisor, baby.

long term horizon, will grow into it's valuation. glad i get a second crack at this'n with real money.

I use VMWare daily. There are many reasons 100% of Fortune 100 have adopted it.

1) The ROI for tech departments is incredible. We saved money the very first year. If I.T. budgets are tight, so much the better. You can buy VMWare, and a lot less servers, for less dollars.

2) VMotion, HA, and other features give us abilities found nowhere else.

2a) It allows us to perform maintenance with NO downtime to users. Virtual servers can be moved to other physical servers - on the fly!

2b) Unplanned hardware failures are recovered automatically in seconds to other VMWare servers

2c) If one physical server gets too busy, VMWare can automatically move some virtual servers to less-busy physical servers. All with the users never being impacted. Imagine the power of this on your e-commerce web sites!

3) Building new servers is now done in a few minutes vs weeks.

4) Adding more computing power to my server farm is as simple as buying one server, and installing VMWare (a half hour process). ALL the virtual servers then take advantage of the new power.

5) Test servers can be built in seconds. All I have to do is copy a production virtual server over to a new server, then rename it.

6) I get powerful back-out tools. If I install a new software program or patch, and it causes problems ... all I have to do is revert to a "snapshot" I took before the install. This really is a big deal.

7) So much more.

Nope - I don't work for VMWare or EMC. I'm just a Tech Manager who has come to realize the power and importance of VMWare's tools for practically all companies. Yes, even small companies.

No other competitor can touch VMWare. Plus, there are more amazing tools coming out soon.

virtualization has a great future.

I like their forey into cloud computing. If I think about it there is no operating system that is ready to build a cloud. The only operating system that is built is done by Google. It is not going to sell its operating system. Google wants to be the host provider. Not all companies would like to host in Google's cloud. They would like to build their own clouds. That is the space VWware makes its place. They started with virtualization. But their vision is to build an operating system that would run applications in linux or windows. A really cool and Grand vision and nobody is competing on their ultimate goal.

Other big thing is their valuations are now reasonable. There is a lot of room to grow and they will.

Sure the company is hailed as the next Google, I just don't buy into it. Sure they will do well, just not as well as people think but I figure why not ride the wave right? Outperform for now, we will see what the future looks like.

Clouds everywhere.....!

Market and economy is going through a rough patch. Once the economy picks up again technology should pick up. Virtualization helps companies manage complexity by reducing the number of physical servers that need to be maintained, and VMWare is the Cadillac in this field.

Strong company, with groundbreaking technology that REALY allow for lower costs, more flexibility and green IT. Their customers are not only users - they are fans of VMware.

They are by far leaders in the market they created, and every single IT analyst - from Gartner to Forrester - would agree that they still leave any competitor in the dust for a large margin, while the market opportunity is still huge.

VMware changed the whole IT game by reinventing the way computers and datacenters are used.

With the recent drop from it's precipitous highs, VMWare is finally approaching reasonable valuations and should rise once a few consistent earnings reports have established a record of revenue growth and market dominance

Customers save money by using their product and I don't think the spending in this area will slow down much more. I don't think Microsoft will be able to move as quickly.

VMWare is back to $50, the low end of my fair value estimate based on potential market size and share. Microsoft's offering is not a big deal. Sadly, Microsoft's reputation and IT managers' needs in a hypervisor are not compatible.

Good position to jump in.

Everyone doesn't need this product but they want it. Small shops spending $2k on a VMWare license can do that rather than spend $4k on two new servers. It's easy math and it's a robust product. The free variants of server virtualization cannot match VMWare and any techie will recommend this product in their DC over any thing else.

Entry point of software is attractive for a small office. ROI for large enterprise customers is a no brainer.

I don't think we'll double money here but I feel a $50 price tag is NOT out of the question and is really where this stock belongs.

I work in the area which VMWARE competes. They really have no competition. The Microsoft product is far behind the feature set which VMWARE has and is not going to have what VMWARE has today until 2011 from what I have been told. Xen is the only other major player in this area, but it is open source and has not gained traction in enterprise accounts. Xen is a nice product but it is only being deployed by research and development shops. Every customer I deal with is converting their environment to VMWARE.