6 ms·

i cannot believe it. > projecting revenue in the range of $1.17 billion to $1.19 > billion, compared with $1.25 billion expected by analysts. > VMWare s

by n0mad01 14y ago

i cannot believe it. > projecting revenue in the range of $1.17 billion to $1.19 > billion, compared with $1.25 billion expected by analysts. > VMWare shares fell 15 percent they're still talking about 1.2 BILLION in revenue. it's never enough ...

VeejayRampay 14y ago
Yeah that's why that whole "job creators" / "we built this" routine doesn't really register with me. Let's call it what it really is, an extremely well-designed (I have to recognize) machine to generate as much money while employing as few people as possible to maximize profit. Now what they're doing with all that cash, I'm still wondering to this day. If someone has a sensible answer to that question I'd be really interested in understanding the rationale. And this is a serious question, since I always thought that laying off people was a last resort type of strategy. EDIT: Rephrased to be less inflammatory and more open to discussion.
- tedunangst 14y ago
  Easy answer is easy. Revenue is not the same as profit.
  - VeejayRampay 14y ago
    Point taken, profit is not revenue, you're absolutely right. Yet I looked the profit for VMWare for Q3 of 2012 and it's indicated that they made some 150 million dollars in Q3 of 2012. Then again, I am not an entrepreneur, sure, I might not understand all the details so this might be a bit naive but 150 million dollars in profit still seems like a good chunk of money and kind of clashes in my head with firing 900 people, the kind of situation I would expect if the company was bleeding money all over the place. Then I looked some more and found this and it got even more confusing: http://www.eweek.com/virtualization/vmware-q4-earnings-up-but-stock-slips-14-percent/ http://www.eweek.com/virtualization/vmware-q4-earnings-up-bu... From a noob outsider's point of view, it's almost as if the "value" of the company is not really correlated with its ability to make money and release good products, but on some decision from the market. And I guess this is where I (and most people who are not stock jockeys) completely lose track, where does that projection of what the earnings should be come from? How do people gauge that a quarter is a solid one or a bad one? Real question, any insight appreciated.
    - tedunangst 14y ago
      Consider that the fully loaded cost of an employee (salary, insurance, stock, taxes, etc.) may be somewhere around $150k. 900 people like that cost 135 million. So basically, most of that 150 million they made is because they didn't have 900 extra people on payroll. "The company projected annual 2013 total revenues to be in the range of $5.23 billion to $5.35 billion." That's a variation of 120 million right there. Those 900 people could mean the difference between making money with the high estimate vs the low estimate. Note that the stock price dropped not because it was a bad quarter (it was a good quarter), but because vmware said projected future revenue is expected to be lower than predicted.
- robomartin 14y ago
  > Yeah that's why that whole "job creators" / "we built this" routine doesn't really register with me. That's 'cause you probably never built a business from scratch. Believe me, not one person who has labored to start, launch and run their own business would make the comment you have. Not ONE. These kinds of statements only come out of a certain place and this is the same place that confused revenue with profit. This is also the place that doesn't understand that a company has to have a financial buffer in place in order to survive the many variables in business that hit you each and every day. What do you think happens when you have a bad quarter and you still have to make payroll for a couple of thousand employees? And pay leases, rents, power, insurance and other expenses? Have you ever had the experience of having to use your personal credit cards to make payroll because you had a bad month? Do that and maybe you'll understand why the comment that doesn't "register" with you "registers" 1000% with those of us who live a different reality.
  - pekk 14y ago
    If you are working to build a company in the US, you are building on top of MANY layers of the US infrastructure. Security, transportation, lights, banks, credit are all things in which the American public is invested, in the public interest. And any company of size depends on individuals besides the founder to do its work. It is not accurate to pretend that you are 100%, solely responsible for your own success, without any other contributing factors. And it is not right to decline any social responsibility in the society which has enabled your successes. Doesn't mean you were guaranteed success. Doesn't mean you didn't have to pay bills or take risks. Doesn't mean you did nothing. Does mean you are not a heroic John Galt pulling himself up by the bootstraps in spite of the rest of society being parasitic. It was your choice to start a business, don't complain at other people if they have not taken the same risk. They also don't have the business.
    - 3pt14159 14y ago
      Just because I was born in a public hospital doesn't mean perpetual claim on life. The government may force lower-than-market acquisitions for land in order to provide more prevalent transportation infrastructure, but that doesn't make it right. Other, freer options could have existed, but violence of the state impede their spread. I never signed the social contract; and food to slave does not entitle ownership. My use of the roads, or benefit derived from them, is defensible. Else I ask; in what manner may I make myself free? Is there a way out of the perpetual claim against my livelihood? Further, if social responsibility is so great for my common man, what right do you have to demand my efforts go towards local healthcare when others a bit further away starve? What makes a fellow countryman more due for grain than a differing skinned man in a land far away? Is it not indefensible to claim ownership of my resources for your health, but hold firm against the claims by others against claims of ownership against your wealth for nourishment.
robomartin 14y ago
Respectfully, I think your comment reveals a lack of understanding of the realities of business. Please think about what you just said. What is the difference between revenue and profit? To investors revenue targets are linked to bottom line profits. That's what they are reacting to.
SeanDav 14y ago
Even if these numbers were profit and not just revenue, it is is very possible for the shares to drop 15 percent. It happens all the time, although usually not at the 15% level. The reason can be summed up in one word - expectations. If everyone was expecting a profit of around 1.5 billion (shares would have been trading accordingly) and results come in at 1 billion then clearly there is likely to a significant and immediate drop in the share price.
acchow 14y ago
I believe you are misunderstanding how valuations work. If the market price assumes an annual growth of 15% and they come in at 10% growth, that will affect the stock price. The fact that they are still making billions is irrelevant.
acchow 14y ago
I believe you are misunderstanding how valuations work. If the market price assumes an annual growth of 15% and they come in at 10% growth, that will affect the stock price. The fact that they are still making billions is irrelevant.
rorrr 14y ago
The absolute value doesn't mean much. It's where it's going that affects the stock price. VMW had declining profits (with increasing revenues) for 5 quarters in a row now. That is very bad. https://chart.googleapis.com/chart?cht=bvg&chs=323x200&chbh=18&chdlp=t&chls&chg=0%2C25&chm=D%2C990033%2C2%2C-1%2C3%7Cs%2C990033%2C2%2C-1%2C5&chdl=Revenue%7CNet%20income%7CProfit%20margin%20(%25)&chco=0066FF%2CFF9900%2C990033&chds=0%2C2000%2C0%2C2000%2C0%2C100&chxt=x%2Cx%2Cy%2Cr&chxl=0%3A%7C2011%7C2011%7C2012%7C2012%7C2012%7C1%3A%7CQ3%7CQ4%7CQ1%7CQ2%7CQ3%7C2%3A%7C0%7C500%7C1000%7C1500%7C2000%7C3%3A%7C0%25%7C25%25%7C50%25%7C75%25%7C100%25&chd=t2%3A941.86298%2C1060.302%2C1055.182%2C1123.026%2C1133.684%7C177.53799%2C200.42799%2C191.436%2C191.729%2C156.76801%7C18.849663%2C18.902916%2C18.142462%2C17.072535%2C13.828192 https://chart.googleapis.com/chart?cht=bvg&chs=323x200&#...

by n0mad01 14y ago

VeejayRampay 14y ago

Yeah that's why that whole "job creators" / "we built this" routine doesn't really register with me. Let's call it what it really is, an extremely well-designed (I have to recognize) machine to generate as much money while employing as few people as possible to maximize profit. Now what they're doing with all that cash, I'm still wondering to this day. If someone has a sensible answer to that question I'd be really interested in understanding the rationale. And this is a serious question, since I always thought that laying off people was a last resort type of strategy. EDIT: Rephrased to be less inflammatory and more open to discussion.

tedunangst 14y ago
Easy answer is easy. Revenue is not the same as profit.
- VeejayRampay 14y ago
  Point taken, profit is not revenue, you're absolutely right. Yet I looked the profit for VMWare for Q3 of 2012 and it's indicated that they made some 150 million dollars in Q3 of 2012. Then again, I am not an entrepreneur, sure, I might not understand all the details so this might be a bit naive but 150 million dollars in profit still seems like a good chunk of money and kind of clashes in my head with firing 900 people, the kind of situation I would expect if the company was bleeding money all over the place. Then I looked some more and found this and it got even more confusing: http://www.eweek.com/virtualization/vmware-q4-earnings-up-but-stock-slips-14-percent/ http://www.eweek.com/virtualization/vmware-q4-earnings-up-bu... From a noob outsider's point of view, it's almost as if the "value" of the company is not really correlated with its ability to make money and release good products, but on some decision from the market. And I guess this is where I (and most people who are not stock jockeys) completely lose track, where does that projection of what the earnings should be come from? How do people gauge that a quarter is a solid one or a bad one? Real question, any insight appreciated.
  - tedunangst 14y ago
    Consider that the fully loaded cost of an employee (salary, insurance, stock, taxes, etc.) may be somewhere around $150k. 900 people like that cost 135 million. So basically, most of that 150 million they made is because they didn't have 900 extra people on payroll. "The company projected annual 2013 total revenues to be in the range of $5.23 billion to $5.35 billion." That's a variation of 120 million right there. Those 900 people could mean the difference between making money with the high estimate vs the low estimate. Note that the stock price dropped not because it was a bad quarter (it was a good quarter), but because vmware said projected future revenue is expected to be lower than predicted.
robomartin 14y ago
> Yeah that's why that whole "job creators" / "we built this" routine doesn't really register with me. That's 'cause you probably never built a business from scratch. Believe me, not one person who has labored to start, launch and run their own business would make the comment you have. Not ONE. These kinds of statements only come out of a certain place and this is the same place that confused revenue with profit. This is also the place that doesn't understand that a company has to have a financial buffer in place in order to survive the many variables in business that hit you each and every day. What do you think happens when you have a bad quarter and you still have to make payroll for a couple of thousand employees? And pay leases, rents, power, insurance and other expenses? Have you ever had the experience of having to use your personal credit cards to make payroll because you had a bad month? Do that and maybe you'll understand why the comment that doesn't "register" with you "registers" 1000% with those of us who live a different reality.
- pekk 14y ago
  If you are working to build a company in the US, you are building on top of MANY layers of the US infrastructure. Security, transportation, lights, banks, credit are all things in which the American public is invested, in the public interest. And any company of size depends on individuals besides the founder to do its work. It is not accurate to pretend that you are 100%, solely responsible for your own success, without any other contributing factors. And it is not right to decline any social responsibility in the society which has enabled your successes. Doesn't mean you were guaranteed success. Doesn't mean you didn't have to pay bills or take risks. Doesn't mean you did nothing. Does mean you are not a heroic John Galt pulling himself up by the bootstraps in spite of the rest of society being parasitic. It was your choice to start a business, don't complain at other people if they have not taken the same risk. They also don't have the business.
  - 3pt14159 14y ago
    Just because I was born in a public hospital doesn't mean perpetual claim on life. The government may force lower-than-market acquisitions for land in order to provide more prevalent transportation infrastructure, but that doesn't make it right. Other, freer options could have existed, but violence of the state impede their spread. I never signed the social contract; and food to slave does not entitle ownership. My use of the roads, or benefit derived from them, is defensible. Else I ask; in what manner may I make myself free? Is there a way out of the perpetual claim against my livelihood? Further, if social responsibility is so great for my common man, what right do you have to demand my efforts go towards local healthcare when others a bit further away starve? What makes a fellow countryman more due for grain than a differing skinned man in a land far away? Is it not indefensible to claim ownership of my resources for your health, but hold firm against the claims by others against claims of ownership against your wealth for nourishment.

robomartin 14y ago

Respectfully, I think your comment reveals a lack of understanding of the realities of business. Please think about what you just said. What is the difference between revenue and profit? To investors revenue targets are linked to bottom line profits. That's what they are reacting to.

SeanDav 14y ago

Even if these numbers were profit and not just revenue, it is is very possible for the shares to drop 15 percent. It happens all the time, although usually not at the 15% level. The reason can be summed up in one word - expectations. If everyone was expecting a profit of around 1.5 billion (shares would have been trading accordingly) and results come in at 1 billion then clearly there is likely to a significant and immediate drop in the share price.

acchow 14y ago

I believe you are misunderstanding how valuations work. If the market price assumes an annual growth of 15% and they come in at 10% growth, that will affect the stock price. The fact that they are still making billions is irrelevant.

acchow 14y ago

rorrr 14y ago

The absolute value doesn't mean much. It's where it's going that affects the stock price. VMW had declining profits (with increasing revenues) for 5 quarters in a row now. That is very bad. https://chart.googleapis.com/chart?cht=bvg&chs=323x200&chbh=18&chdlp=t&chls&chg=0%2C25&chm=D%2C990033%2C2%2C-1%2C3%7Cs%2C990033%2C2%2C-1%2C5&chdl=Revenue%7CNet%20income%7CProfit%20margin%20(%25)&chco=0066FF%2CFF9900%2C990033&chds=0%2C2000%2C0%2C2000%2C0%2C100&chxt=x%2Cx%2Cy%2Cr&chxl=0%3A%7C2011%7C2011%7C2012%7C2012%7C2012%7C1%3A%7CQ3%7CQ4%7CQ1%7CQ2%7CQ3%7C2%3A%7C0%7C500%7C1000%7C1500%7C2000%7C3%3A%7C0%25%7C25%25%7C50%25%7C75%25%7C100%25&chd=t2%3A941.86298%2C1060.302%2C1055.182%2C1123.026%2C1133.684%7C177.53799%2C200.42799%2C191.436%2C191.729%2C156.76801%7C18.849663%2C18.902916%2C18.142462%2C17.072535%2C13.828192 https://chart.googleapis.com/chart?cht=bvg&chs=323x200&#...