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SeekingAlpha: VMware will face tough competition

David does the explaining very well as he was flooded with mails from people seeking advice:

The question might resolve as to whether VMWare/VMW can capitalize on its first-mover advantage to create a brand sufficient to keep IT departments insisting on the VMWare solution over its competitors. For investors, the November share price decline and subsequent presumed base assuage a large measure of price and time risk, and help to create a maximum reward opportunity.

The likelihood exists that Q4 will be a barn-burner, but with increasing competition comes decreasing profit margins, so the risk is very real to the company... and its stock. Recall that just as capitalism bids away excess returns via increasing competition, so too does certainty serve to bid away opportunity via, perhaps paradoxically, an increasing share price. Conversely, the greater the uncertainty, the greater the potential reward. Thus, I am a buyer soon of VMWare/VMW, despite the prevailing level of uncertainty. Well, really, because of the uncertainty. I am, after all, an investor.


Labeled under Opinions, here's the rest of that useful advice.
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