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» VIEW ALL POSTS Jan 28 2008   7:29PM GMT

VMware stock plummets, but company won’t ease pricing in 2008



Posted by: Alex Barrett
Tags:
Virtualization
VMware

Despite VMware Inc.’s having missed analysts’ estimates for the fourth quarter of 2007 — which sent shares into an after-hours free-fall on Monday (trading was at $61 a share at 6:00 p.m. Eastern Standard Time, down from $83 at the market’s close) — the company’s CEO Diane Greene maintained that the company will not lower product pricing in 2008. “We do think we can maintain our pricing,” Greene said on an earnings call with investors. “We anticipate continuing our pricing over the course of the year.”

Greene also said that while customers (of which there are now reportedly more than 100,000) are investigating Hyper-V, thus far the company hasn’t seen an impact from Microsoft’s forthcoming virtualization platform. “Our customers have evaluated it and told us they saw no reason to switch,” Greene said, pointing to an InfoWorld report that compared Hyper-V to VMware Server 1.0, “but not as polished.”

Of course, Wall Street is rarely satisfied. During Q407, VMware increased its revenue 80% to $412 million, profits more than doubled, and the company is on a run rate of $1.6 billion. But the ongoing shift in revenue from licensing to services (support, subscription and professional services), as well slower U.S. growth relative to international markets has worried investors, who responded by depressing the stock price to levels not seen since mid-August, days after the IPO.

Looking forward, Greene told investors that in 2008 the company plans to unveil new products for security and virtual desktops and will “preview a major new Virtual Infrastructure suite.”

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  • Alex Barrett
    For those VMware customers who are also running the Citrix application server, how will VMware deal with their ongoing struggle to handle the Citrix internal I/P addresses, especially as it relates to using virtual images to clone new virtual servers? Will this issue be the wedge issue that pushes those shops over to XENSEVER and/or Hyper-V?
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