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How State Taxes Put a Bigger Pinch on the Poor"This is still a psychologically damaged market; take for example, what happened with VMware (NYSE: VMW) after its latest earnings announcement," notes Toby Smith in ChangeWave Investing.
"VMware recently reported that its fourth-quarter net income more than doubled on an 80% increase in revenue. Despite these excellent results, after-hours selling has plunged the shares lower by 25% to around $61.
"The culprit appears to be analysts' forecasts for an 82% increase in revenues. The buzz on the Street is that this miss signals stiffer competition in the virtualization space from Microsoft (NASDAQ: MSFT) and Oracle (NASDAQ: ORCL).
"However, during the conference call VMW management said customers have tried some competitors' products and told them that they see no reason to switch.
"This sell-off is similar to what recently happened to Apple (NASDAQ: AAPL) -- blowout performance followed by a hatchet job on the shares. As with Apple, we see this price drop in VMW as a great opportunity to establish a low cost-basis in the stock.
"Though our ChangeWave Alliance's recent Corporate Software survey showed negative growth for the industry overall, virtualization's flat comparatives were easily the best of all software segments. And among virtualization companies, VMware continues to show overwhelming strength versus its competition.
"In the context of a recession, virtualization will continue to stand out in the software industry because companies that invest in these products save substantial bucks.
"By using existing servers more efficiently, customers cut down on the number of servers they need, as well as the total power consumed by their data centers and other computer facilities. We strongly recommend taking advantage of this attractive price and start or add to VMW positions at these new lower levels."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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