VMW - A falling giant with one foot in the grave

I’m going to try to do my best to not put everyone to sleep with this, so here we go. I just wanted to start a conversation about VMWare and where I think they’re headed in the future, DOWN.

VMWare is a long standing competitor in the cloud space of Enterprise Tech. They had the first virtualized x86 architecture. Their hypervisor managed to beat a lot of companies to the market with a solution that made setup, configuration, and management easy. They captured a large market share early and managed to hold it for a long time. In the Enterprise/Cloud space it can take years before a company changes their solutions. They managed to build upon this strength to capture and hold market share for a long time as a result. They gained added strength when they became part of Dell. It gave them an avenue to quickly and easily sell complete solutions. Unfortunately for them, it wasn’t meant to last.

Quick aside:
Microsoft didn’t manage to make it to market with their competing software until one or two server cycles too late. Currently they are offering pretty much the same solutions that VMWare is, but better. Microsoft is quickly taking market share from VMWare. They offer better customer support and a solution that more people are familiar with.

VMWare has managed to report good earnings quarter after quarter and yet they keep falling. After the COVID crash they managed to recover, but unlike other big tech companies they never set a new high and even failed to regain their previous high. Quarter after quarter the one big issue - Where is the growth?

The answer: Unless VMWare can somehow put out a new innovation (probably impossible) they will continue to shrink in the face of massive competition.

My personal thought, which is not financial advice. I think VMWare will again today put out earnings that just slightly beat the estimates or will put out a miss that will be the first of many misses (without much reduced future outlook). Over the next year I expect to see VMWare come down further. Long term its possible that they may put themselves into a valuation that makes them ripe for purchase.

Any thoughts on an earnings play for puts?

VMWare just spun-off from dell under a month ago, forward guidance is going to be interesting now that the spin off is done, im not sure which way this would go

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looks like the earnings call is today in AH - put prices all seem to be up I grabbed some put lotto’s based on the overall market today - wish me luck

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I should have stated, I am not playing earnings here. I’m looking at a possible long term continuation of this downtrend.

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From what I’ve seen in the last year of ransomware incident response most people are moving to ESXi / VSphere / VCenter post incident due to the increased security over HyperV. Also cybersecurity insurance carriers are requiring an EDR solution (as well as MFA), majority go with Carbon Black (who VMware owns) or Crowdstrike with Trend Micro, Sophos and some others taking a smaller piece of that market… my .02 c


Can confirm, I work in the IT industry in a MSP (Managed service provider) and I have a couple town clients I manage which their insurance carriers are pushing exactly what you are saying. The datacenter I work and manage is full vsphere/vcenter which is why I am biased towards them and honestly we undercut Azure prices spec for spec all the time and are still doing fine. You would think vmware would be making a killing considering the new server chips are more cores and each core needs to be licensed but it seems they aren’t able to take advantage of it well. Originally last week I was going to buy calls but held off because I didn’t think they’d beat enough to support the OTM calls I was going to purchase so good thing I didn’t.

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yup Azure / AWS just isn’t priced competitively enough for SMBs so I think VMWare still has decent foothold there, really have to be a larger company /enterprise for it to make sense + the insurance stuff. I had the same thought process with calls, sat out because I didn’t see it making much of a move either direction

I would say AWS is priced right for SMB’s - it is more a knowledge gap
As more and more people go to the cloud and Managed Services Providers disappear more and more I think you will more adoption with AWS, Azure & Gcloud -

An example would be looking at office 365 vs other hosted solutions.