Apps & Software

VMware Initiation Today Looks Conservative (VMW, EMC)

VMware Inc. (NYSE: VMW) has been one incredible post-IPO after EMC Corp. (NYSE: EMC) partially spun-off the virtualization leader in August 2007.  It picked up new coverage this morning after William Blair & Company initiated research coverage with a Market Perform rating and an Aggressive Growth company profile.

Analyst Laura Lederman put estimates at $0.80 pro forma EPS for 2007, $1.14 pro forma EPS for 2008, and $1.60 pro forma EPS for 2009. we wanted to see what the P/E ratios would like like, and we’d note that these targets today are the same as consensus for 2007 and slightly under consensus for 2008.  If  Based upon these estimates and a $80.20 close from Thursday, this would be a forward P/E for the virtualization leader of 100 on a trailing 12-months, forward 2008 P/E of 70, and a forward 2009 P/E of 50.

Lederman was quoted as saying,  “We have covered the software space for more than 20 years and rarely have we found a solution with a cost-savings proposition as compelling as virtualization software.  In fact, many software products do not deliver a positive quantifiable return on investment, but VMware’s virtualization software can greatly lower IT costs and increase hardware utilization (from 10%-15% to roughly 80%) by aggregating servers into shared pools of IT capacity. This tremendous savings in hardware and management resources explains why the server virtualization market and, in particular, VMware are growing so quickly.” 

  • a673b.bigscoots-temp.com will be making note of VMware on our open email distribution list earlynext week ahead of some important industry and company developments wesee on the horizon besides VMware’s earnings report on January 28.
  • Last week Jim Cramer named EMC as one of his picks for value fishingin the technology sector that was either overlooked oversold, and henoted the intrinsic value of sub-$5.00.  We have also noted how famedvalue manager Whitney Tilson was discussing with "THE EMC STUB" with the explanation for the trade.

This note also estimates that the entire marketplace is only 20% penetrated on new servers shipped and that VMware can grow its top line numbers by 43% annually over the next three years.  Lederman also puts a total market opportunity of $10 Billion by 2011.

Earlier this month Lazard Capital initiated coverage with a Buy rating, and the average price target from analysts on Wall Street is still roughly $105.00.

Jon C. Ogg
January 25, 2008

The Average American Has No Idea How Much Money You Can Make Today (Sponsor)

The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.

But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.

Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.

 

Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.

1 https://www.fdic.gov/national-rates-and-rate-caps

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.

AI Portfolio

Discover Our Top AI Stocks

Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.

You can follow him investing $500,000 of his own money on our top AI stocks for free.