With the announcement this week of its quarterly results, virtualization software provider VMware saw its share prices sharply drop despite meeting earnings predictions, and reporting year-over-year revenue growth of 14 percent to $1.36 billion.
One of the reasons for the drop in confidence has been a slowdown in new enterprise license agreements, according to FBN Securities analyst Shebly Seyrafi. The reasons behind this, he stated, include “increased seasonality, heavy investment in sales training (which resulted in fewer actual selling days), and elongated sales cycles.” ELA deals were down 15 percentage points compared with the previous quarter.
A ServerWatch article, however, notes that there’s plenty to be optimistic about when it comes to VMware.
The report cites a research note from Alex Kurtz, an analyst for brokerage Sterne Agee, who said VMware is poised to gain new customers in storage, management, networking and cloud. Kurtz notes that its management products, as well as new vCloud Hybrid Service and new storage platforms, position it well to capture a slice of the $10 billion total addressable market available to VMware and its channel partners.
Investment site Motley Fool implies that VMware is a supplier to consumer hardware company Apple, and that its latest release could spell enormous growth potential for VMware.
Barron’s also notes that VMware’s Software Defined Networking technology will help solve some of the data center challenges faced by the likes of Apple, Google and others.
Despite the recent dip in its stock prices, investors seem confident that VMware will be a valuable stock given the services that it supports and the ones it will enable in the future.