NEW YORK (TheStreet) -- Virtualization and cloud giant VMware
(VMW - Get Report) is not in a good place.
The company, which reports second-quarter earnings Tuesday, is up 4.5% for the year to date and trades around $94. But this is a "nervous" 4.5%. There has been no real conviction to the stock's direction. Since the stock reached its 52-week high of $112.82 on April 2, VMware has lost more than 15% of its value.
Although VMware is the undisputed market leader in virtualization software and cloud-based infrastructure, the company is now facing credible threats from Citrix (CTXS) and Red Hat (RHT), among others.
Investors want to know to what extent VMware can grow in the new battleground that is OpenStack while also advancing its server and system administration business. This is the only way from VMware to grow into its valuation and justify that it deserves investors' confidence to bless it with a P/E that doubles the industry average.
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