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Monday, January 26, 2009


Though I like both on a longer-term basis, there’s clearly risk to Q1 estimates.  After a strong Q4, there may be a bit of an air pocket on the other side as budgets are stuck in wait and see mode, back-end loaded or just plain non-existent right now.  I would suspect guidance to be somewhat murky.  While EMC estimates seem to call for a 12-13% drop, VMW estimates have a very modest 5% drop modeled – I don’t see why VMW wouldn’t drop more than that – spending is being watched closely in corporate America and IT typically receives more than their share of scrutiny.  While the pipeline will remain large, I think it may be difficult to get new projects off the ground until there’s a bit more economic stability.  VMW projects are by nature new as virtualization is in early adoption stages.

I have no position in either heading into the number and I expect to be looking for excuses to buy on weakness.

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