Rising Competition for VMWare - Caris

Looks like the competitive waters are starting to be perceived to be rising around corporate software maker VMWare (VMW). I say perceived because it’s not like anyone has been shown to be eating into their market for programs that run server computers, but the analysts are sounding more and more cautious. Following on a note last week from Baird & Co. analyst Jayson Noland lowering the firm’s price target to $50 from $80, Caris & Co.’s Shebly Seyrafi today cut his price target to $50 as well, from $60, in part because of heightened concerns that competitors are about to strike closer to home. VMWare enjoys an overwhelming lead in its programs to date.

Says Seyrafi, VMWare get 64% of revenues from the United States, which concerns him given the slowing US economy and the risks to corporate software spending. But in particular he’s worried about recent announcements, including last week’s disclosure from Microsoft (MSFT) that they will ship their “HyperV” program in August, and Citrix Systems’s (CTXS) announcement that they will have pre-installed software on computers from Hewlett-Packard (HPQ), among others in the near future. He expects both moves could crimp VMWare’s sales growth to 36% in 2009 and 31% in 2010, lower than he’d previously estimated.

VMWare shares are up about 2% at $45.99.

Comments

[steveballmer]

Just so long as we are paid per license I don't care!

[sunrises_4all]

Vmware is still an excellent leader. Agree, it's given a nice place in the woodshed for sometime.

Even so, condsider, the company has over 1000s accounts (previous bloomberg report) and M&As are even possible in future as VMware has quite a few supporters.