Prospects for VMWare's Stock are Still Weak Following Recent Tumble

7/10 - "VMware, Inc. (VMW) which is 80% owned by EMC Corporation (EMC) made headlines this week when the company fired their CEO (Diane Green) and lowered their 2008 outlook. While the change in leadership may have caught many by surprise, guidance lower should have been expected given the difficult economic environment and the announcement by Microsoft Corporation (MSFT) that they will be competing in the same space. ZachStocks has covered VMW in the past as concerns over a high valuation set the stock up as a potential short. Those who held short positions in the stock this week are likely sitting on solid gains despite a turbulent market."

"...VMW has declined to less than a third of its market cap from late last year. This is a serious blow to anyone who had a concentrated position in the name (yes that means EMC too). Unfortunately, the picture doesn’t look exceptionally bright from this point. Gaps lower on declining guidance in a bear market aren’t usually met with buying. Add to that the fact that VMW is still nearly 40 times this years expected earnings and you have a stock that could continue to trade lower. While I have peeled off (read bought back) a portion of my short position, I still hold the majority of the shares short expecting a slow drift lower into the end of the year."