No that long ago, VMware (NYSE: VMW) was a high-flier tech company. But since reaching $124 in late December, the company's shares have been on the descent. In today's trading, the stock price is off 11.51% to $33.60.

True, based on its Q2 report, things look pretty rosy. Revenues surged 54% to $456.1 million and net income was up 53% to $52.3million, or $0.13 per share.

Then again, VMware is a leader in so-called virtualization technologies, which help bolster data centers and complex corporate networks. Unfortunately, it looks like the deteriorating macroeconomic environment is taking a toll. For example, VMware is seeing slippage in close rates for software licenses.

Something else that's jarring: two weeks ago, VMware's CEO and co-founder, Diane Greene, left the company.

However, her replacement is Paul Maritz, who was a legendary team player at Microsoft (NASDAQ: MSFT). No doubt, he understands the difficulties of managing growth as well as dealing with tough competitive threats.

Interestingly enough, VMware faces big challenges from Microsoft, which is launching its own set of virtualization technologies. Actually, VMware is going to give away its main virtualization platform.

Now, looking at the long haul, the prospects for VMware are bright. The company has lots of opportunities in Asia and emerging economies. And there are some megatrends, such as cloud computing.

However, in the near-term, there are certainly big challenges. But the good news is that VMware has a proven leader at the helm.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.