"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.
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