Needham & Company Downgrades VMware (VMW) to Hold

Needham & Company downgraded VMware (NYSE: VMW) from Buy to Hold following Q4 results and a disappointing CY15 outlook.

Analyst Scott Zeller commented, "We are downgrading shares of VMW from BUY to HOLD following DecQ results that were a modest beat, but with a disappointing CY15 outlook. We are concerned about CY15 revenue guidance, now to be +10-12% y/y, vs. “mid teens” in August; management is attributing the trim to F/X and increased ratable revenue. We find the steady retrenching of guidance from 16-20%, down to “mid-teens” in August, and now “10-12%” y/y growth to be concerning, in spite of the F/X challenges. Of particular note is the ratable/SaaS revenue, which is now 5% of total VMW and fast growing. We believe the impact to gross margins is not yet fully understood, and could potentially be an issue later into CY15 as SaaS/ratable continues to grow."

For an analyst ratings summary and ratings history on VMware click here. For more ratings news on VMware click here.

Shares of VMware closed at $80.61 yesterday.

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