VMWare Crushed In After Hours

January 28, 2008 at 7:09 pm  ·  Category: Market Commentary, Stocks

VMWare (VMW), one of the hottest IPOs of 2007, was crushed in the after hours tonight (down 27%) after reporting 4th quarter earnings.

Revenue of $412 million came in $5 million shy of analysts estimates and their revenue forecast for 2008 was about $20 million beneath analysts estimates (VMW 4Q Earnings Release, Conference Call Transcript).

This kind of thing always strikes me as overkill.  Because of a $5 million miss and a $20 million forecast shortfall next year, more than $10 billion in market value gets knocked off the stock.  Doesn’t quite seem proportionate.

The problem, however, is that the stock is just so pricey.  It got so speculative and ridiculous – and now the air is coming out (VMW 6 Month Chart).

All the highfliers are getting held to a different standard.  The momentum game is over.  The rules have changed.

Disclosure: Top Gun has no position in VMWare (VMW) shares.

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