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Wednesday, January 30, 2008

The Quarter Massacre

Investors can be an unforgiving lot – that makes the stock market a fickle, frustrating space. Last August, VMware, maker of virtualization software, went public in the most anticipated tech IPO in years, immediately climbed from an opening price of $ 29 a share past $50, going up to $80-100 by the year end. Yesterday, it came out with excellent set of numbers with Q4 revenues up 80% and projected 50% growth in coming years. Not too shabby at all.

But the same crowd of nervous investors that pummeled Apple – for flattening iPod sales - after its great quarter thought 50 percent growth sounded like too quick a drop-off from 70-80 percent rate VMware had been posting. The reasoning that the growth rate is slowing because the company is much larger now went unheeded, and by the time the last knife was put away, the share was down 35% to $28, its debut price - investors had lost close to $10b in market cap.
Now you see the power – or is it a curse – of quarterly numbers. Time for Private Equity funds to move in for the kill and take it private?

Ah, that brings me to the Forbes Midas list of VCs that got released. Here you go. John Doerr, Michael Moritz, Ram Shriram… and so it reads.

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