VMware Jumps After Shareholder Meeting
SAN FRANCISCO - VMware (VMW) - Get Report rose sharply Thursday, a day after shareholders had their first public sit-down with executives since the company went public Aug. 14.
The stock was up $4.71, or 7%, to $71.03, shooting well past its Thomson Reuters consensus price target of $65.85 in recent trading. Earlier in the day, shares surpassed their three-month high of $71.50, set May 2.
CEO Diane Greene addressed competition with
Microsoft
(MSFT) - Get Report
-- the only question posed at the Wednesday shareholder meeting. "They seem fairly serious about copying what we're doing," she said.
"They will hit some of the market because of their broad reach," Greene said. "But we feel very good about our position, because if a customer wants to take full advantage of virtualization, they're going to choose VMware. That's what happens in competitive situations we've been in, where Microsoft is discussed," she added.
A beta version of Microsoft's virtualization software is embedded into Windows Server 2008 and will be formally released in coming months.
In January, analysts had pulled back from a heady consensus price target for VMware in October of $105 that consistently lagged below the actual trading price, on fears that IT spending would slow and that Microsoft's foray into virtualization would corrode VMware's market-share dominance.
Since January, the stock had generally traded below a $60 threshold, when the company projected slower growth of 50% for 2008. But VMware has recovered somewhat since posting its first-quarter results April 22.
Shareholders seem buoyed by VMware's 69% growth rate for the first quarter, despite the company's reaffirmation of an overall growth forecast for 50% growth for the year, implying much slower growth for the balance of 2008. In January, executives forecast the company's slowest growth for the second half of the year.
EMC
(EMC)
, the majority owner of VMware, was up 93 cents, or 5.6%, to $17.61 in recent trading.